Bper Banca Stock

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the BPER Group consolidated results as at the 30th of June 2026 and Acceleration Beyond B:Dynamic Full Value 2027 presentation. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Nicola Sponghi, Head of Investor Relations at BPER. Please go ahead, sir.

Thank you, and good morning, everyone. I'm pleased to welcome all of you to BPER's conference call, where our top management is going to present BPER's Q2 and H1 2026 consolidated results and an update on B:Dynamic's projection for 2028. Before I leave the stage to BPER CEO, Gianni Franco Papa, a couple of important points. Please note that today's slide set and the press release can be found on BPER's corporate website.

I would also advise you to take note of the disclaimer on Slide 1 of the presentation document. After the presentation, the CEO will be joined by CFO, COO and CRO to address any questions that might arise. I will reiterate that this is reserved for financial analysts whom I will kindly request to ask a maximum of two questions each so that everyone will have the opportunity to contribute to today's call. Thank you very much.

I will now leave the stage to Mr. Papa, CEO of BPER.

Good morning, ladies and gentlemen. It's a pleasure to welcome you all to our event in which we present our first half results and an update on B:Dynamic projection for 2028 on the basis of the current perimeter. As you recall, back in 2024, we set ambitious targets for ourselves. We are overdelivering on such targets while in parallel, we have completed the integration of BPSO. That said, today, we stand on a broader and even more solid platform, ready to capture our full potential through a selected number of additional initiatives. I look forward to meeting with you personally to illustrate the details of this strategic update. Let's move to the next slide.

I'm proud to say that today, at approximately halfway into our plan, we are beating our ambitious targets set in 2024. I must thank all our colleagues, customers and partners because altogether, we have been able to overdeliver on B:Dynamic, and this has been recognized also by the achievement of Italy Best Bank Award by Euromoney.

First half 2026 is the best half ever in the history of the bank with over EUR 1.3 billion of adjusted net profit, representing an almost 15% year-on-year growth. The operating and financial performance continues to remain strong, as you will appreciate later in the presentation. Thanks to the business combination with BPSO, we have created a platform which is ready for enhanced top and bottom line growth.

Our investment in technology, talent and capabilities, along with our strong capital position, position us to leverage our operating platform and capture organic and inorganic growth opportunities. On top of the ongoing business acceleration, we are raising our ambitions through a number of selected strategic levers, which I will walk you through later in the presentation.

As a consequence, this will lead to accelerated performance and sustained value creation, which will enable an increasing and very attractive shareholder remuneration in terms of both cash dividends and share buybacks. Let's take a couple of minutes to review our historical performance since the launch of B:Dynamic. The net income line trajectory has been remarkable. Despite the significant growth, the cost of risk remained at extremely low levels and operational efficiency continued to improve.

As you have seen throughout the plan, we have demonstrated a remarkable internal capital generation, totaling EUR 3.6 billion since B:Dynamic was launched. The outstanding operating and financial performance has attracted strong capital inflows from active and passive funds, which allows BPER market capitalization to increase from EUR 4.4 billion to over EUR 29 billion at the end of July.

Furthermore, if we add dividend payments to the calculation, shareholders have benefited from an important upswing in total shareholder remuneration, reaching more than 460% since the beginning of 2024, significantly better than any other Italian and European peer above EUR 20 billion in market cap.

Let's turn over to our tangible results of B:Dynamic to date. As you can see on the left side part of the slide, a remarkable profit-driven internal capital generation allowed for an outstanding shareholder remuneration since the launch of B:Dynamic. Cumulative distributions between 2025 and first half 2026 amount to over EUR 3.1 billion. This is an outstanding achievement given that during 2025 and 2026, we've been very busy in successfully completing the integration of BPSO.

As you are aware, we have been working together with our colleagues of BPSO in order to set up and integrate the new operating platform aimed at capturing in a very short time period, EUR 290 million of annual cost and revenue synergies. By end 2026, we will have achieved over 25% of total synergies, and we expect to fully reach our target by 2027. That said, we expect further synergy potential in 2028 and beyond. As you can see, we have migrated almost 1 million clients to BPER's platform in approximately 7 months.

And in a similar way, we have focused on upskilling actions to onboard 3,500 colleagues on our service model. And finally, our new operational procedures will render the bank leaner, swifter and more efficient. Let's move to the next page, which focuses on our operating achievements. This slide represents our progression since the launch of B:Dynamic and our achievements in 2025 as BPER stand-alone. Notably, in the first 12 months of the 3-year plan, we are well ahead of our ambitious target.

And let me add that these remarkable results have further accelerated in the first half of 2026. On our first pillar, unleash our clients' full value, which focuses on capital-light commission income, we registered an outstanding performance. In the first year, commissions already grew by 5%, well on track to achieve the 12% target by the end of 2027. In the context of our second pillar, capture our latent economies of scale, which focuses on achieving a best-in-class operational efficiency, the bank decreased operating costs by 5.2%, already very close to the 7% reduction target by the end of 2027. On our third pillar, leverage our strong balance sheet.

Today, our CET1 ratio remains well above our target of 14.5% despite the acquisition of BPSO and is among the highest in the Italian banking system. Finally, the last pillar, which focuses on completing the modernization of the bank has allowed us to make significant progress in terms of technology, ESG and sustainability as well as organization and people.

To modernize our technology since the start of B:Dynamic, we have already invested EUR 230 million of the EUR 650 million plan, totaling almost EUR 1 billion since 2022. ESG and sustainability remain a must for us. We are determined to remain leading pioneers in this area, and we have materially improved our position on ESG ratings. Finally, we have made clear progress in upskilling our colleagues. In this context, we have empowered 21% of our colleagues with our academies.

As I mentioned earlier, ladies and gentlemen, despite current geopolitical risk, macroeconomic headwinds and accomplishing a swift integration of BPSO, this first half and second quarter have been the best ever. Before I start giving you details of our financial performance, I'm keen to highlight a number of key features of this remarkable first half 2026 results. First and foremost, first half '26 was our best ever 6 months result with an adjusted net profit standing at over EUR 1.3 billion.

The strong performance in NII and commissions resulted in reported Total Revenues of EUR 3.9 billion, up 4.5% half-on-half. Excluding the positive impact of the TRS, Total Revenues are up by 1.5%. In line with our plan, commissions continue to have a very positive run throughout the year given the focus on AuM, Life Insurance and Bancassurance products. We have further strengthened our performance in Wealth Management, where commissions increased by more than 10% compared to the previous half in 2025.

Our profitability remained high with an adjusted return on tangible equity at a robust 20.6% or 19.6%, excluding the positive impact of the TRS. We maintain a very solid capital position with a CET1 ratio at 15%, resulting from an organic capital generation amounting to 163 basis points, equal to EUR 1.3 billion in the last 6 months. Similarly, the liquidity profile of the new group is very sound with short- and long-term ratios increasing and well above regulatory thresholds.

And finally, the quality of our loan book continues to stand at the best levels in the Italian banking industry with a cost of risk of 28 basis points. Let's move on to the net profit drivers on Slide #7. The quality of our revenues remains outstanding, thanks to our very strong commercial performance. NII has proven to be very resilient, both half-on-half and quarter-on-quarter. I remind you that in Q1 and Q2, almost 1,000 employees were busy at work in supporting the integration.

Despite the integration efforts, commissions between Q1 and Q2 were basically flat. As such, I'm extremely satisfied about the progress, which can be seen on a growth rate of almost 5% half-on-half. Costs have continued to come down, thanks to our focus on operational excellence, which we have identified as one of the key targets of B:Dynamic Full Value. LLPs increased by 3.3% half-on-half. In the quarter, LLPs were slightly higher due to a realignment of our credit framework post integration. We will touch on this later in the presentation.

As you can appreciate, our record first half and Q2 bottom line result was achieved gross and net of the positive effect of the TRS and other market effects. In the pages to come, we'll provide you with an in-depth review of each and every item. Let's move on to Slide #8, which touches on 2026 guidance. A quick glance at our guidance for the current year is important as we have improved 2 KPIs. Given the current development, we have better the outlook for 2026 on NII and cost/income ratio. Let's move to the next slide on first half 2026 results.

Among the main drivers of Total Revenues in the quarter, I would highlight record NII and higher loan volumes, a good performance in commission income despite the integration process, as customary in Q2, a strong contribution of dividend income and the strong contribution from the TRS and other market effects. As you can see, first half Core Revenues reached EUR 3.6 billion.

And finally, I would like to underline the continued solid trend in productivity with a net revenues to risk-weighted assets ratio, which increased from 8.7% to 9.5% between Q1 2025 and Q2 2026. Let's move on to the next slide, which focuses on net interest income. The performance of the net interest income line was exceptional in Q2, posting a record figure at over EUR 1.1 billion, driven by positive commercial dynamics.

As you can appreciate in the slide, the main driver in the quarter was volumes. Despite the integration, commercial actions to increase quality loan volumes have been extremely effective. Spreads slightly improved in the quarter. Finally, I would like to highlight that our NII sensitivity to 100 basis points movement amounted to approximately EUR 200 million in the quarter versus EUR 225 million in the previous quarter.

Now let's move to the development of Net Commission Income on Slide 11. The performance of commission income half-on-half progressed according to our plan at plus 4.8% and plus 5.9% year-on-year, reaching more than EUR 1.350 billion despite the integration effort, which was carried out in second quarter 2026. The most important contributor, which represents more than 50% of commissions are banking services fees, which almost reached EUR 700 million.

Wealth Management fees, which increased by over 10% 6 months on 6 months, are rapidly playing a more important part as a percentage of total commissions. These were mainly driven by high-quality AuM fees. Fees from Bancassurance continued to register strong growth rates, up by over 13% compared to first half 2025. This impressive pace in commission income growth results from one of our key pillars of B:Dynamic Full Value. As such, our commission income to Total Revenues ratio continues to improve.

Excluding the effect of the TRS, the ratio has improved from 34.8% to 35.9% half-on-half. This is due to our persistent focus on capital-light, high-quality noninterest income products. Let's move to the next slide, which focuses on the progression of total financial assets. In the quarter, total financial assets increased by over EUR 13 billion to almost EUR 425 billion, whilst year-on-year TFAs increased by EUR 18 billion. It is important to note that the loan-to-deposit ratio stood at 77.6%, stable quarter-on-quarter. This will enable us to continue to grow the loan book and to transform client liquidity into AuCs and AuMs.

Let's move to the evolution of costs on Slide 13. We continue to be extremely determined on operational efficiency. Total Costs were down by 3.9% half-on-half, further reducing the cost-income ratio from 45% to 41.4% -- please note that the cost/income ratio will stand at 42.6%, excluding the TRS. HR costs increased by just over 1% half-on-half, while non-HR costs decreased by approximately EUR 77 million. In terms of the combined group, total headcount stood at 22,500 with a decrease of approximately 500 people, mainly related to the exit of temporary workforce hired to support BPSO integration in Q1 '26. As a final note, the strong improvement on non-HR costs in the last 12 months is the result of our relentless focus on cost efficiencies.

Let's move to Slide 14. As you can see, the cost of risk was almost flat on -- at 28 basis points half-on-half, thanks to positive dynamics in asset quality. LLPs increased by almost EUR 10 million in the quarter. This allowed us to increase the Total NPE Coverage Ratio from 52.8% to 54.1% in order to maintain a thorough control on the high quality of the loan portfolio, including an alignment of coverage framework post integration.

In this particular context, I would like to underline that in the last 18 months, we have increased the Total NPE Coverage Ratio by almost 7 percentage points from 47.3% to 54.1% -- needless to say that our coverage ratio remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality. Last but not least, do note that following our alignment of coverage framework, our overlays in Q2 '26 amount to EUR 230 million, increasing by over EUR 50 million quarter-on-quarter. Our conservative approach is further confirmed as we report on Q2 coverage ratio on performing loans at 0.6%. Once again, this ratio is among the highest in Italy.

Let's move on to asset quality on the next slide. Asset quality continues to be outstanding, one of the best in the Italian banking system. Gross NPE stock was almost flat, both quarter-on-quarter and year-on-year. Between Q1 and Q2 '26, the increase of EUR 100 million in bad loans was due to the complete realignment of our credit framework post integration. Similarly, the net NPE ratio remained flat at 1.1%, underlining the very healthy state of our loan book. This further confirmed by an important -- an improvement of Stage 2 classifications, mostly due to the credit framework realignment post integration.

Let's move to Page 16 to elaborate on our capital position. Post integration, we stand at a very comfortable CET1 ratio of 15%. We maintain our path of generating quarter-by-quarter a substantial amount of internal capital, which allows us to be ready for potential headwinds, competitively strong and financially prepared for any inorganic growth opportunities should they arise. It also allows us to be very forthcoming in terms of shareholder distributions.

In this context, yesterday, the Board agreed on a proposal to discuss at the next Board meeting scheduled for Q3 results, the distribution of an interim dividend of approximately EUR 700 million. This is an increase of approximately EUR 500 million compared to EUR 196 million paid in November 2026.

Let's move to the next section. In the next section, we will illustrate our strengthened platform, the acceleration levers and the improved projections for '28 and 2029. As you can see on Slide 18, our position today has further improved. As already mentioned, this is also recognized by the achievement of Italy Best Bank Award in 2026 by Euromoney. We are now one of the leading domestic players in Italy with approximately 6 million clients, of which 5 million individuals and almost 1 million corporates.

As one of the largest asset gatherers in Italy, we can now host around EUR 475 billion of total financial assets between life insurance, assets under management, assets under custody and customer deposits. Thanks to the acquisition of BPSO, we have strengthened significantly our presence in rich Northern Italy. We are now the leading bank in Lombardy, Liguria and Sardinia, and we rank second in Emilia-Romagna by number of branches. By clients, customers, financial assets and banking branches, we are clearly positioned as the third bank in Italy.

Let's move to the next slide, where we illustrate our fully functioning operating platform. As you can appreciate, the business combination has transformed the bank into a larger platform, which is fully functioning and ready to scale, thanks to four key features. First, we have a wider and pervasive network. If you recall back in February '25, I stated that the new bank would reinforce and broaden the proximity client coverage model, becoming a go-to bank for families, SMEs and corporates.

Now also thanks to the integration of BPSO, we have transformed BPER into a nationwide capillary platform that is mostly concentrated in the wealthiest Italian regions. We have distinctive product capabilities. On top of consumer and corporate loan services, we focus on Wealth Management, Bancassurance products, global transaction, banking services and advisory services through our CIB unit. We have specialized service models to serve all our clients. Over time, our business model has increasingly become omnichannel, ensuring high-quality service and improved access to all clients.

We also have leading edge digital and technology foundations. Our IT ecosystem is fully integrated and modernized. We are pioneering in AI-enabled software development. The substantial CapEx deployed in technology and AI provides us with a strong foundation for the future, supporting the acceleration of business growth and enabling the bank to be more efficient and more effective. This platform created through a series of integrations is now ready for further scale up, thanks to a proven playbook, a management team with strong execution capabilities and a flexible and future-proof technical stack.

Let's turn to Slide 20. B:Dynamic execution is continuing at a very strong pace throughout our retail, Corporate and Wealth Management divisions with continued attention to all strategic pillars of the plan. Yet the potential goes beyond the targets we have set. For example, in Lombardy, we boast a market share by branches of 17%, while we hold approximately a 10% market share by loans.

Today, we are in a better position to capture a wider portion of this potential. In particular, we see five areas where our new platform offers opportunities for further acceleration. Let me walk you through them one by one. B:Champion. The integration of BPSO has made our corporate platform complete and competitive, and we are now ready to capture our fair share, focusing on Italy's midsized champions. In this context, we expect total lending to corporate clients between 2025 and 2028 to increase by 13%. B:Wealth. Our focus on capital-light commission growth will be further accelerated by leveraging the hidden value of our wealth management clients.

We anticipate AuMs to increase by 18%, reaching approximately EUR 125 billion in 2028. B:Insured. Along with our Bancassurance partner, Unipol, we will be offering a wider product range, and we will be serving our clients in an efficient and effective manner. We anticipate that net insurance commissions will increase by 55%, reaching EUR 230 million in 2028. B:Digital. We will unleash our digital GenAI and AI powered platform in order to increase productivity. As part of this strategic lever, we will also achieve significant cost reductions.

We anticipate the cost-to-income ratio to reach approximately 40% in 2028. B:Excellence. We are simplifying our approach to clients. The bank is optimizing front and back office function to increase client-facing time, enable higher proximity to our clients and enhance productivity. Frontline time dedicated to commercial activities will increase by 30% by the end of 2028. Let's turn to lever #1, B:Champion.

Let me remind you that we created our CIB division just over 2 years ago. Thereafter, we acquired BPSO that has strong corporate capabilities. Today, we have a corporate platform, which is complete and competitive, enabling us to scale our share of wallet. As you can see on this slide, we will be leveraging our strengthened network through a substantial amount of business centers, trade finance centers and approximately 3,000 business specialists, mostly situated in the most productive export-oriented Italian regions.

The goal is to capture a higher share of wallet from this important client segment characterized by Italian champions within corporates and SMEs. On top of lending objectives, we are increasing the penetration and so the share of wallet of several products and services. In this context, we will be aligning with Italian best practice and strengthening the offer of GTB services, cash management offerings and factoring. In addition, through our CIB unit, we will be increasing client penetration in terms of structured finance, corporate finance and other advisory added value services.

We will benefit from the combined effect of increasing the penetration of underserved and untapped clients of the former BPSO network, along with leveraging BPSO consolidated expertise in selected areas such as factoring and nondomestic banking services to widen the client offer as a go-to bank for our customers. Let's move on to the second lever. B:Wealth focuses on increasing products and client penetration of our Wealth Management division. This division has delivered results above our expectations over time, and it continues to grow.

As mentioned in first half 2026, Wealth Management fees grew by 10.3% half-on-half. Today, we have consolidated a platform that enables us to capture the hidden potential of our clients, including entrepreneurs. Our service model is centered around BPER Banca Private Cesare Ponti, which acts as a group wealth management hub. In this context, ARCA SGR, which already holds over EUR 50 billion in assets under management and about 1 million clients will play a key role.

The group is making significant investments in strengthening the private banking network and has set ambitious goals in terms of productivity. We are strengthening the private banking network by increasing the number of private banking centers and dedicated bankers. In this way, we will increase proximity and so frequency of contact with our existing and potential clients. We are focused on fully serving our hidden private clients with the potential of doubling the size of our current private customer base. We will do this by attracting new clients and increasing the share of wallet of existing ones, deepening our relationship with SMEs and entrepreneurs.

Finally, we will leverage our strategic presence in Luxembourg, Switzerland and Monaco, where we expect important and tangible results. As you can appreciate on this slide, we are anticipating asset under management growth of 18%, reaching EUR 125 billion in 2028. In a similar way, we expect wealth management commissions to grow by 14%, landing at EUR 1.2 billion in 2028.

Let's move to the next slide. B:Insured is based on our strong partnership with our insurance partner, Unipol, the largest Italian non-life insurer. Historically, Bancassurance has been one of our distinctive strengths.

The results we have delivered are exceptional with net insurance commissions more than doubling since 2021. We believe we can do even more by delivering a few focused initiatives. The product offer will be broadened with new modular product solutions aimed at increasing client insurance penetration. We will grow our insurance commissions from EUR 148 million to EUR 230 million, increasing by 55% by the end of 2028.

Beyond the retail clients, the insurance offer will increasingly target private clients, SMEs and corporates, where we expect a significant potential to deliver tailor-made insurance solutions. In this way, we will be able to increase Net Commission Income and in parallel, improve the credit rating of our clients. We will succeed, thanks to a wider omnichannel access, combining 230 specialists, a new dedicated remote support unit and the fully fledged digital offer for basic products.

Let's move to the next page to B:Digital, one of the key levers underpinning our acceleration. Our digital foundations are solid, thanks to the investments carried out in recent years. As such, a new dedicated digital business unit has been recently created and is now in place to act as a transformation catalyst for the bank, ensuring an efficient cross-functional collaboration across businesses and technology. Building on these foundations, we have defined a selected number of new high-impact initiatives to capture the next frontier of digital and AI-powered productivity.

Firstly, we are leveraging AI to support our relationship managers in client origination, improving the effectiveness of our commercial campaigns and enhancing an omnichannel yet personalized approach on the basis of our customer needs. Secondly, we will deliver automated first level controls, accelerate end-to-end digitalization of key processes and automate central functions. This will enable a more efficient and more effective end-to-end product delivery. Lastly, we'll scale up the adoption of AI and Agentic AI in our IT factory, covering the full software development life cycle from requirements definition to coding and maintenance.

In this way, we will be able to increase the overall productivity, enabling lower IT CapEx for the same level of output. In this context, cybersecurity threats are a high priority for us, and we plan to further strengthen our cybersecurity to protect our customers and operations. The size and frequency of cyber attacks is ever growing in the banking industry, and we need to be more than prepared.

All in all, B:Digital will contribute to increase the productivity of our relationship managers by 15% to secure EUR 300 million of savings and to enable a 20% increase in CapEx productivity. Overall, this will allow us to reach a 40% cost-income ratio by the end of 2028. Let's move to the fifth and last strategic levers. B:Excellence, our fifth lever, will enable us to create additional value, enhancing our client approach, increasing customer-facing time and strengthening advisory value-added products and services.

Our focus on customer excellence already delivered clear results with B:Dynamic. During 2025, on a BPER stand-alone perimeter, we have increased productivity by 10%. We have upskilled over 4,000 employees, and we kicked off a new talent program. Yet we can do more. Thanks to new technologies, today, like never before, we have an unprecedented opportunity to bring the client even more at the center of what we do. We are reviewing roles and positions to make the network more efficient, streamlining support functions around our client service model.

Our specialized workforce will be empowered with more available time, enhancing proactive client interactions and accountability. Upskilling our talent base will be key. Our colleagues will be supported by new digital tools. As such, it is important for us to enable our colleagues to maximize utilization of AI tools to increase efficiency and productivity and to support them in the process. As a result, our clients will benefit from a higher proximity of our advisers.

Let's move on to the next slide in which we will lay out our macroeconomic assumptions. Given the ongoing geopolitical turmoil and given the macroeconomic context is somewhat uncertain, we have based our 2028 projections on assumptions which we deem conservative, albeit realistic. Italian GDP growth is expected to remain basically flat in 2026 and 2027 with a pickup in 2028 at 0.7%. On the other hand, EU inflation is expected to decrease from 3.3% to 1.9% in 2028.

Finally, we have taken a conservative approach with interest rates, assuming Euribor 3 months flat at 2.25% for the full 3-year period. That said, we look to the next couple of years with some caution given the potential headwinds deriving from the current global situation. As you can see on this slide, we expect Total Revenues to reach approximately EUR 8 billion by the end of 2028. On top of the positive effects of volumes and rates on NII, we expect continued progress on Net Commissions.

As such, revenues will increase by approximately EUR 600 million, the main contributor being Net Commission Income, underlining our strong focus on high-quality capital-light revenues. In this context, it is important to note that the ratio of Net Commissions to Total Revenues will grow from 35% to 38% by 2028. NII is expected to increase by EUR 300 million, thanks to the combination of higher volumes and higher rates. We expect customer loans to increase by some 9% by 2028, thanks to pervasive commercial actions focused on consumer finance and mortgages in retail and loans in corporate, where we plan to materially increase the share of wallet on the best counterparts.

Please note that the phasing out effect of Ecobonus between 2025 and 2028 is expected to have a negative impact on NII of some EUR 300 million. Let me repeat, is expected to have a negative impact on NII of some EUR 300 million, so that you can appreciate better the increase in the revenues that we are projecting. Finally, Net Commissions are expected to increase by approximately EUR 400 million, driven by a 55% growth in Bancassurance and a 14% growth in Wealth Management by 2028.

On the next page, we will focus on the key drivers of costs. Our obsession for a best-in-class operational efficiency will continue Beyond B:Dynamic. Despite EUR 200 million of inflation-related and D&A increase, we will reduce absolute cost by some EUR 100 million while supporting the strong top line growth. As a result, our cost-income ratio is expected to improve from 45% in 2025 to approximately 40% by end of 2028. We anticipate EUR 300 million in cost savings, which are related to the full achievement of synergies from the BPSO integration as well as to other initiatives such as end-to-end digitalization of key product journey, the automation of mid-back office activities and the containment of other non-HR costs.

FTE will decrease as a result of previous agreements and natural turnover. In this context, we are expecting over 220 exits in 2026. Furthermore, we expect mainly in the same year, 800 additional exits as agreed in December 2025 with the unions. Let's move to the next page, where we will outline our technology modernization effort. The size of our CapEx investments aimed at modernizing the bank's technology ecosystem between 2022 and 2025 amounted to approximately EUR 1 billion.

We invested in key areas. Among others, we modernized the bank technology ecosystem. We created distinctive digital channels. We digitalized transactions evolving towards cashless branches, and we deployed a full range of AI use cases with particular impact achieved in the IT factory. Going forward, we will focus our investments on the remaining areas that require to be modernized further. For example, automation of key processes to make entire end-to-end process swifter, more efficient and hence more effective, strengthening our corporate platform with the aim of improving customer targeting, anticipating customer needs and delivering time-to-market solutions; and finally, elevating cybersecurity and IT resilience to the next level as a protection to the increasing number of cyberattacks in the banking industry.

Overall, thanks to the investments made and the scale reached, we are now in the position to continue to invest significantly, EUR 600 million over the next 3 years, while at the same time, increasing our CapEx productivity by over 20% compared to 2025. We will now turn over to the main projections for 2028 and some for 2029. I would like to draw your attention to our 2028 projections. Total Revenues will reach EUR 8 billion. This will be positively impacted by the effect of higher NII by about EUR 300 million and higher commissions for a total of EUR 400 million.

As a result, commissions on Total Revenues already today aligned to the best practices will further increase from 35% to 38%. Operating costs, excluding depreciation and amortization, our operating cost will materially decrease by almost 4%, bringing the cost-income ratio down to approximately 40% to 45% -- we expect to improve our projection on cost of risk. We have, however, kept a conservative approach with an expected cost of risk below 35 basis points in light of the current geopolitical turmoil and the potential impact on the Italian economy.

All in all, net income will increase from approximately EUR 2.4 billion to about EUR 2.7 billion. CET1 ratio will stand at above 14.5% despite a higher shareholder remuneration. This will enable us to have a strong capital buffer should macroeconomic conditions deteriorate, be prepared for potential business combination should they arise or evaluate higher shareholder remuneration if the conditions allow it. On the far right of the slide, a number of projections for 2029 have been included. These are limited to Total Revenues, where we expect an increase to over EUR 8.3 billion.

Our ratio of Net Commissions to Total Revenues is expected to improve to approximately 40%. We expect our cost/income ratio to fall below 40% and our CET1 ratio will stand at a robust level of above 14.5%. Let's move on to the next page where we show how our volumes will grow. On this slide, you have a snapshot of our key volume drivers, both on and off balance sheet, together with our asset quality projections for 2028. Net customer loans will increase to over EUR 140 billion with CAGR of 3% between '25 and 2028. Our total financial assets will be growing at around 2.9% per annum.

Out of this, assets under management will increase from EUR 106 billion to approximately EUR 125 billion, equivalent to a growth rate of 5.7% per annum. Risk-weighted assets will increase in line with our loan book at 3.4% per annum. Thanks to our conservative risk approach, asset quality measured as net NPE ratio will remain among the lowest in the Italian banking sector with an NPE ratio of 1.2%, while the coverage ratio is planned at above 53%, among the best levels in Italy.

And finally, let's move to the next slide, where we focus on our shareholder remuneration, which will be higher and sustainable. Thanks to the further acceleration we are foreseeing, not only confirm, but we also improve our expectations on the overall shareholders' remuneration for the 3-year period. Thanks to the solidity of our balance sheet, we expect to deliver sustainable yearly distributions, including buybacks of 85% between 2025 and 2028, distributing approximately EUR 7.5 billion.

Of this amount, dividend totaling EUR 1.4 billion have been distributed for financial year 2025, translating into a payout ratio of 75%. Including the authorized buyback and accrued dividend for first half 2026, distribution to shareholders amounts to EUR 3.1 billion. Further shareholder remuneration may arise should the bank generate excess capital. Let me reiterate that yesterday, the Board agreed on the proposal to discuss at the next Board meeting scheduled for Q3 results, the distribution of an interim dividend of approximately EUR 700 million.

Let's move to my closing remarks. In conclusion, let me remark the five key messages I would like you to bring home today. B:Dynamic is overdelivering on promises with commission growth and efficiency gains well ahead of schedule already at the end of the first year, while preserving our capital strength and progressing steadily on our modernization. We have achieved a record semester with over EUR 1.3 billion adjusted net profit, equivalent to a 15% year-on-year growth.

Thanks to the integration of BPSO, we have now built a stronger platform ready to scale further, deliver enhanced growth and capture organic and inorganic opportunities. We see potential for an Acceleration Beyond B:Dynamic with five strategic areas driving stronger results in 2028. This will allow us to accelerate performance, sustain our value creation and deliver attractive shareholder remuneration with EUR 7.5 billion throughout 2025, 2028 through a combination of cash dividends and share buyback.

Our strong capital position will enable us to evaluate higher shareholders' remuneration if the conditions allow it. We believe that these projections are a substantial acceleration that we consider in our style, ambitious but realistic.

I wish to thank you for your attention, and we are now ready to take your questions.

[Operator Instructions] The first question comes from Ignacio Ulargui of BNP Paribas.

I have two, if I may. The first one is on the revenue targets for the business plan, particularly focused on fee income and other noninterest income revenues. I mean the targets that you have provided look to me a bit like a floor given the track record that you have delivered so far. Do you see them in general as such? Or do you think that there is an aggressive stance in terms of the outlook?

The second one is on capital. You have announced today that you are unwinding the TRS for 7.5% of your own shares. Could you help us to understand how this will interplay with the buyback announced and whether we should expect some new announcement in terms of buybacks in '27 and whether these sales will be canceled potentially?

Thank you, Ignacio, for the question. So revenues, our style is to be conservative. I think that the projections we are showing are important. We have both on the NII and on the commission income, a clear path ahead of us. The projection on NII, for instance, the projection assumes ECB deposit rate at 2.25%. And obviously, we have also the possibility in case interest rates go up to have a better situation. And in as much as commissions are concerned, I would not consider this as a floor. But again, we prefer to be conservative. But the growth we have projected in the first 18 months of the plan show you already the path that we are following.

We are already very advanced compared to what we have promised with B:Dynamic, which means that we will be pushing even more on that. In as much as the TRS, we have not announced any unwinding on the TRS. We have announced that we are stopping -- and therefore, whatever information related to the TRS, whatever actions we will be taking on the TRS will be obviously informed at a later stage when -- if and when we will take a further step in terms of that.

In as much as the share buyback is concerned, we have announced also that we have been authorized by the Board to start the share buyback. The share buyback will start immediately after the summer. This is because usually in summer, the market is less receptive to transactions of this kind. In any event, the launch of the share buyback will be preceded by an official announcement in accordance with the applicable legal requirements, obviously, including all necessary information and disclosures.

The next question comes from Noemi Peruch of Morgan Stanley.

I would like to ask if you could share your thoughts on the recently announced evolution in the M&A in Italy and the potential opportunity for -- and I would like to ask whether you could consider using the shares underlying the share buyback and the TRS to fund M&A potentially. And you mentioned that you stopped the share -- the TRS, but you have not without unwinding it. What's the difference between the two?

Thank you, Noemi, for the question. So if I understand correctly, your first question relates to the MPS possible deal. So the development of the M&A in Italy. Did I got correctly because I was not hearing fine your question. Am I right?

In general, the evolution of M&A and if this could present an opportunity for you?

Yes. Well, it's a matter of fact that the evolution is -- we have a lot of moving parts still now on the M&A activity in Italy. There are a lot of ongoing developments. Some are, I would say, clearer as we go ahead. Some others are not really clear in what will be the final realization of this transaction. So it's a matter of fact that, yes, we are looking at a further consolidation of the Italian market. But if you recall, it's a couple of years that I'm saying that in Italy, banks need scale to support the Italian economy being Italy, the second manufacturer of Europe and the scale and the size of the banks so far, we were not really helping the Italian economy in developing.

So let's see what the development of these actions will give us in the near future, I believe. In as much as your second question is concerned, no, I mean, we have started the buyback because we got the approval and so on and so forth. We are not considering to use these shares for any kind of transaction. So far, we don't have -- we are -- we might be part of the consolidation we were discussing before. Everybody read about the possible -- the agreement between Intesa and Unipol, but we will analyze the situation if and when, I would say, this will be presented to us.

And in as much as the TRS is concerned, we have stopped the TRS, which doesn't necessarily mean the unwinding of the TRS. Stopping means that we are blocking basically our exposure to the TRS at the current level, which at the end of July last was at 7.95%. So we could keep this position going forward. You know that our TRS has a maturity of 3 years. So it would be expiring in 2028, basically or if the decision and the Board will decide, we will do something and we start unwinding. But for the time being, no decision taken.

And the underlying shares of the TRS could that grant you some optionality?

The buyback, you mean, right?

The TRS, the TRS.

No, TRS, no optionality for the simple reason that it is a cash transaction. And being a cash transaction, the only situation that will develop is that when we'll unwind the TRS, depending on the valuation of the stock, we will be receiving cash or we'll be paying cash, but no optionality attached to that, no share delivery.

The next question comes from Sofie Peterzens of Goldman Sachs.

Here is Sofie from Goldman Sachs. So you very helpfully guide for around 3% CAGR loan growth going forward. Could you maybe just discuss what dynamics you're seeing both on the lending and deposit side? How much competition is there? Is there any pricing pressure either on the lending side or the deposit side?

And yes, how you kind of see growth opportunities here? And then my second question would be on Unipol and BPER. You have helpfully the slide on Unipol, but could you maybe just discuss how the potential transaction is going to work if Unipol acquires the branches from MPS and kind of how potentially you could further strengthen your relationship with Unipol. And yes, if you could discuss that.

Yes. Thank you for your question. So in as much as the development of lending and deposit is concerned, you have seen in the numbers that we have presented today that our growth in lending keeps on track and on the promise that we made and what we have indicated back in October 2024, a 3% growth CAGR, and we are projecting this growth also up to 2028. We have 6 million customers. We are one of the largest, if not the largest player in terms of mortgages, for instance, on the retail side. We are expanding our business on the consumer finance and on the salary-backed or pension-backed financing.

For this particular -- so for the consumer financing, as you know, we are operating exclusively with our existing customers in order to be also very safe in terms of risk associated to this kind of business. In terms of corporate, it's a matter of fact that since the inception of our B:Dynamic 2027, we have strengthened our positioning on the market in terms of corporate on all the different areas of corporate, including also CIB, where we are now very active in arranging deals, transactions, structuring financing for our customers. And this is also witnessed by the strong increase in commission driven by this sort of activity.

So we will be growing and we will keep on capturing and increasing our market share in this particular -- both on, as I mentioned, retail and corporate on the corporate side. Obviously, there is a lot of competition. So as such, every -- basically every day, there is a bank that is trying to get deals and offer better prices, both on the deposit side and on the loan side. Nevertheless, if you see also in as much as the TFA is concerned, total financial assets, you see that we are constantly growing. You see flat deposits, but the deposits are flat because we are converting deposits into AuC, AuM and increasing also the loans to our customers.

So we keep on growing, and we will keep on growing in that direction. In terms of the possible deal which is becoming more probable than possible. So looking at what the newspaper are today indicating these days are indicating, I would say that the plan that we presented and the levers of acceleration that we have presented remain focused on our current perimeter.

We have created a very strong platform ready to capture growth opportunities, both organic, as I mentioned before, and inorganic through opportunities that might arise in the market. In as much as Unipol is concerned, Unipol for us is a very good long-term strategic shareholder. is a key partner in Bancassurance that for us is a core growth business. We have existing agreements on commercial partnership. And this independently from any hypothetical consolidation scenario.

Obviously, we will be assessing future opportunities with a usual disciplined approach. And as usual, in the best interest of all stakeholders. So we will analyze this once we have a clear indication of the perimeter that will be offered to BPER. And only at that time, we will have a clearer picture of numbers and so on and so forth. That to say that so far, we are not discussing with Unipol because, obviously, the main transaction is Intesa on Monte dei Paschi and from there, everything will derive.

The next question is from Marco Nicolai of Jefferies.

I've got a couple of questions. The first one is if you could help me reconcile the EUR 7.5 billion distributions with the more than 85% payout ratio because I'm struggling a bit to get there. So based on my numbers, I don't even reach your previous 75% dividend payout ratio for the next few years, given what you have already announced for '25, the dividend and also including the EUR 750 million buyback. So can you give us please some color on this? How is the 85% payout divided in the various years?

Shall we assume that the dividend payout remains at 75% plus the EUR 750 million you are going to deliver in terms of buyback? Perhaps the answer could be in the profit, so in the net profit evolution. So if you can give us some color also on the net profit evolution between '25 and '28. So this is the first question. And the second question is on this potential transaction offered by Unipol.

So I understand that after all, that's not certain yet. However, you already have an idea of what could be the perimeter and what would be the expense broadly related to that perimeter. So my question is, how do you intend to pay and would be a good idea to ramp up buybacks in order to pay for that, given that the time frame, it's pretty clear now and in order to approve -- to get the buybacks approved by the ECB and your shareholders, it takes some time. Why you are not being beforehand more aggressive on the buyback plan, preparing for that transaction? Or do you plan to pay for that perimeter issuing new shares because there is a big difference in terms of EPS accretion?

Thank you for the question. I take the second one and the first one will be answered by Simone Marcucci, our CFO. So let's put it in this way. The information we have so far and the information that everybody read on the newspaper, we do know, yes, that 635 branches will be transferred to us in case the deal goes through and in case the Board of Directors and the extraordinary shareholders' meeting of BPER will approve it. And attached to the 635 branches, that will be part of the head office of Monte dei Paschi.

But we don't know, and that's why I cannot give any indication in this particular case where these branches are rightly located. So we have a rough idea, and this is what has been announced by the CEO of Intesa that was giving some indications, but we don't have a specific indication of where do they stand. We don't know exactly how many people will be transferred to us. We don't know where these people are working, whether in the branches who are commercial, very busy in commercial activities or are part of the office.

And therefore, it is very difficult to assess the numbers beyond the numbers that have been given to the press. So it is -- if it goes through and when it will go through, is a good transaction for us because this will enable us to further strengthen our position in Italy. we could be even bigger -- we will be even bigger than what will be. We understand that there will be a kind of a couple of million more customers coming to us, which is a further acceleration of our activity.

But it will be -- it's very difficult today to dwell into numbers and specific indications of the transaction. And we will be able to do that only when we will have a clear understanding of the situation. In as much as how the transaction will be performed, reading the news basically is these branches will be sold to Unipol. Unipol will then approach BPER offering this branch to us and to basically pay in the branches as a capital increase -- a contribution for capital increase of BPER.

So there's nothing we are going to pay with the shares that are coming from the buyback. So this is something that Unipol will be offering and if approved by the extraordinary shareholders meeting is basically a contribution in kind for a capital increase of Unipol. In this way, Unipol will avoid if everything is approved, the whitewashing and the need for an offering for the total shares of -- these are information I have. And for the time being, I'm not in a position to give any other details.

So you exclude basically using the shares that you've already bought and you will keep -- and won't cancel, you won't use basically the shares to pay for the perimeter at all?

No. This is an option that has never been discussed. And so I -- frankly speaking, I cannot give you an answer whether I'm excluded or not. bearing in mind that if everything progress the way it is, this is something that will happen in 1.5 to 2 years from now because everybody has to go through different authorization. So we'll have first Intesa that has to go through the authorization from the regulators, all the regulators involved, somewhere over 40 regulators.

Then it will be Unipol that has to go through regulators. And then it's BPER that has to go through regulators to get the approval. Therefore, we are not talking about a transaction that will happen in the next 3 to 6 months, but something that will take time and I believe quite a long time to get through. Ask through Simone for the other question.

Thank you very much for the question. So the assumption that we have in our plan is the dividend, I go for accrual for competence, not for cash. We have a dividend 2025, you have seen 75% in '26, 77% in '27, 79% in '28, 81% plus the EUR 750 million already approved buyback, we have more than 85%. Clearly, everything is calculated on the stated net profit. The only difference, therefore, that there are between these figures and your hypothesis calculation could be in the, let me say, not aggressive plan, as mentioned before by the CEO, and this could be only the delta that could be between us and...

The next question is from Lorenzo Giacometti at Intermonte.

I just got one question on -- one follow-up basically on the payout policy. I mean you also cited in the presentation about potential excess capital return. I mean in this potential scenario, should we expect the excess capital to be returned via additional share buybacks or through potentially higher cash dividends? And then I have basically another one, which is more of a statistical one. How much, I mean, of the earnings growth embedded in your plan or in your 2028 targets is still driven by the BPSO integration? And by that, I mean, potential additional synergies you may try to extract or are more related to the five initiatives you just presented?

So thank you. So we mentioned that given our strong capital position, if, as we believe, we'll be able to keep on generating such a strong organic capital generation, we'll be in a position to evaluate higher shareholder remuneration if the conditions allow it because obviously, we are talking today about something happening in the future. We need to analyze what the macroeconomic situation, the geopolitical situation and so on and so forth will be when this will happen.

I cannot tell you today whether this will be more on cash or share buyback because this is a decision that is taken by the Board on a yearly basis, differently from the past, where we were paying only -- there was only a cash out. We already mentioned that we are going to increase the total return, let's say, the distribution to our shareholders reaching 85% might be also be increased on -- at a different level and higher level if the conditions allow it. And this will be cash out and buy back.

The proportion between the two will be decided at a later stage. In as much as your second question is concerned, we have always said that the EUR 290 million synergies, EUR 190 million cost synergies and EUR 100 million revenue synergies will be delivered by 2027. These are the synergies on BPSO integration. And we believe that this is a very large amount given the short period of time through which we'll be delivering this. 25% of the synergies, more than 25% will be delivered in '26 and the remaining part in 2027.

Then you have seen that we are mentioning in the -- for the year '28 that we will have a reduction in cost reduction of EUR 300 million. This EUR 300 million include EUR 190 million of synergies plus some additional synergies coming from BPSO integration that will be delivered in 2028, together with other initiatives in cost reduction that we are going to have in that year. The same works for revenues. Revenues, we indicated EUR 100 million by 2027. We have a strong increase in revenues in 2028.

Obviously, part of this increase in revenues comes from additional synergies that we'll be able to deliver from the integration of Sondrio. Let me give you an example about that. You know that BPER on stand-alone basis had a much stronger commercial activity than BPSO in terms of cross-selling activities to the point that if you were looking at the commission on Total Revenue, the percentage of commission Total Revenues in the first quarter of this year, BPER stand-alone had reached 39.8%.

The number we are figuring now, we are indicating today is 35-point-something percent. Why? Because incorporating BPSO, obviously, we have incorporated a lower percentage of commission on Total Revenues. We see already quite a good activity, commercial activity coming from the integrated branches of former -- but obviously, it will take longer time than December '27 to be able to bring the branches of former BPSO on up to the same level of commission creation of the BPER branches. That's why also the growth in revenues that we see in '28 include additional revenue synergies coming from the integration of BPSO, Plus we will have some other initiatives that will create further growth.

The next question comes from Giovanni Razzoli of Deutsche Bank.

I have three questions. The first one is a clarification. Is the share buyback of EUR 750 million finalized to cancellation of the shares, if you can please clarify this point? The second question is on your CET1 ratio in 2029, the 14.5%. Shall I read this managerial ambition that is that this is the level of CET1 you plan to run in the next couple of years? Or is simply the CET1 ratio that will result after the retained earnings and the organic capital generation?

And so in that case, what would be the level of CET1 ratio that you see as optimal for a group like BPER? And another question is on something that has not been touched yet, but has surprised me in this call, that is the manifestation of interest for part of the businesses of BFF. I struggle to understand the rationale of such manifestation of interest for two businesses like payments and custodian, which require a scale. So I would like you to elaborate a bit on this, what is reported on the press release.

Okay. So EUR 750 million buyback, we have not yet finalized the cancellation. We are starting in September, as I mentioned, after summer, I would say, the buyback. It will take some time to do it. And then we will see what to do. We will follow the market practice. In any case, as I mentioned several times also in previous call, this is a decision that has to be taken by the Board, and we will -- when the interest of the shareholders of the bank will be for that, we will decide what to do with this. with the shares coming from the buyback.

In terms of CET1 ratio, the numbers that we said more than 15.5% CET1 ratio, this is coming from the simple translation of the numbers of the growth of the bank. I think that we could work with a CET1 ratio of at 13%, which I think is -- would be a right level considering also the asset quality we have, considering the large amount of provisioning we have. And therefore, I think that we could go with that. But you know that we have a conservative approach. You know that in the past, having such a strong capital allowed us to be quick in reacting to market movement and being able to go to the market as in the case of acquired a bank. So we keep always an optionality in having a higher capital and higher CET1 ratio.

Having said so, I also mentioned that if we see that optionalities are no more there and we keep on generating such a strong organic capital generation, either condition allows us will increase the distribution to our shareholders. In terms of BFF, first and foremost, we have just issued a nonbinding expression of interest. So it's nonbinding and expression of interest. I see an industrial I would say, reason to do this transaction. They are -- we are interested only in the acquisition of the part related to payments and depository bank businesses. You know that we have an asset management company, this could be.

We have within our BPER this -- we acquired through BPSO already a custodian activity because BPSO had a custodian activity, which could be integrated. So it's just an expression of interest that we'll be analyzing, but industrially for us, it makes sense to have such a -- I think will be -- we will be bringing into the group an additional product factory, but only related to these two activities, no interest at all for whatever is related to factoring, lending and so on and so forth.

The next question is from Andrea Lisi of Equita.

Sorry, I want to come back to the target of dividend 2025, '28 of EUR 7.5 billion because it's not clear to me also the answer that you provided before. If I try to reconcile, I have EUR 7.5 billion target, we can subtract the EUR 1.4 billion that have already been distributed in 2025. We subtract EUR 700 million of share buyback and we get to EUR 5.4 billion. If we apply the payout of 85% means that the cumulated net profit will be EUR 7.4 billion that divided by EUR 2.1 billion per year way below your indication and target.

So if you -- I'm struggling a bit on this. And so if you can help us in indicating what does not come, what is not correct in the cards. The second question is a clarification. So you have -- at the beginning, you have indicated your ambitions regarding NII and fees, considering that they are not a floor that you use a prudent approach.

But anyway, I want to focus on other income. In 2025, there were EUR 450 million in the plan, you are targeting EUR 300 million. Can you explain us the reason for this decline? There is any reason for that? And another sorry for this is if you have also adopted some conservative approach on costs. And so if you think you can retain some margins should the revenues not perform as targeted in the plan?

So Andrea, thank you very much for your questions. Now Simone will enter into the details of the buyback. Just one notion. We paid this year EUR 1.4 billion, that is the 75% payout ratio on the 2025 results. The EUR 750 million buyback is on top of this. It's not deducted because if I understood correctly, you said you deduct EUR 750 million buyback. EUR 750 million this year is on top of the EUR 1.4 billion that we paid already. And Simone...

Yes. Thank you very much, Mr. Papa. So as I mentioned, in '25, we have 75% I go by accrual. So therefore, we have a 75% dividend payout that it means around EUR 1.364 billion of dividends. In the following year, we will have 77%, for example, in '26 plus the EUR 750 million share buyback. In '27, we have 79%. In '28, we will have 81% mathematically, we arrive at the figures that is stated on the presentation. I don't know if there is some thoughts, maybe we can clarify in a separate call later on, but it's mathematical effect.

In relation to the other revenues in the plan, excluding the interest margin and the commission, yes, compared to 2025, we have clearly decreased because we have to take in account that in '25, there was -- there were some one-off, for example, the FITD effect. And clearly, these are not repeatable like other effects. And therefore, in the plan, yes, in other revenues, not commission, interest margin, we have taken a conservative approach and we have a lower amount compared to the 2025.

So in as much as your question is concerned, Andrea, cost, I think that we have indicated that by 2029, we will be below 40%, which I think is already an extremely good target for our bank. because first, we should understand and recall where we were coming from in '22, if I recall correctly, we were at 62%. Today, we closed the quarter at 38 points something for a total of 41.8% or 42.34% if we exclude the TRS. And we are projecting to be at 40% by '28 and below 40% in 2029.

Obviously, as shown in the last few years, if the situation -- the macroeconomic situation worsen, and therefore, it will be more difficult to reach the revenues that we have indicated, we will have all the tools in our hands to stay at this 40-ish percentage point of cost in order to have a 40% cost-income ratio. So we are really monitoring constantly the costs. There are costs that are -- could be really further reduced as we have shown that are the other cost in as much as HR cost is concerned, obviously, there's much less that you can do because it goes with contract and so on and so forth. But the target for us anyway is to be below 40% by 2029 or at around 40% in 2028.

Just to be completely clear, so 2028 payout will not be 85% will be 81%, correct?

Yes, it will be 81%, and 85% is the average of the whole 4 years.

The next question is from Luis Pratas of Autonomous Research.

I also have a few clarifications on the capital trajectory. Could you please confirm what's the threshold for any excess capital distribution? Is it 14.5%? Or is it higher than that? Then maybe could you also comment on any expected tailwinds, headwinds on capital across the plan, stuff outside of the organic capital generation, so be it the DTAs, or anything extraordinary, let's say? Then also to make sure I understand. So you plan to accrue those amounts that you just mentioned.

So it's not 85% then. Like when do you actually get 85% distribution accrual? And then my second question is again returning on the BFF transaction. Maybe could you also comment on what's the expected level of CET1 impact that you are expecting at this stage? Do you think this can be a cash-only transaction? Or maybe do you need to fund it with equity? And a bit more in general, like in terms of your M&A targets, like do you have any minimum objectives, for instance, like a return on investment thresholds or like any EPS accretion goal?

Thank you for your questions. We don't have a threshold for CET1 ratio of capital for returning to shareholders as dividend part of this. As I said, we will be analyzing the situation when it will happen. And if we see that we have such a strong organic generation, we are going to increase the payout to our shareholders, distribution to our shareholders. as we have been doing so far, what we are projecting now because it's true that you are not looking at -- you're saying you never reach the 85%.

But if you add to the 75% dividend payout for 2025 that we paid in April this year, May this year, so the 75% you add EUR 750 million of buyback, you will see that the distribution for 2025 in 2026 goes up to 113%, I think, something like that. So if you take this into consideration, you will see that with the increase in distribution that has been indicated by Simone, so the 77%, 79% and 81% with the inclusion of EUR 750 million buyback, it goes up to for the period '25, '28 to 85%. So we don't see any tailwind for capital in the point that there's no DTAs. And I don't know if you...

We have -- like in the previous plan, clearly, we have the securitization plan for '27, '28, EUR 3 billion risk-weighted asset release.

In as much as your question for BFF is too early to say. We have, as I said, sent a nonbinding expression of interest that has been submitted to BFF Bank today. This will allow us to go through the due diligence. We will analyze the situation. We'll see whether there is the possibility of buying only these two business of BFF.

BFF, I understand, came out with information saying that they are not going to sell piece by piece, but to have somebody going for the overall business. Obviously, we'll have to team up with somebody who is interested in buying the factoring business and whatever lending activity they have. But today, we don't have further information. It's something that we will look at. And this binding nonbinding expression allows us to start a due diligence and then to finalize in case an offer. And only at that time, we'll see how much is going to cost and how we are going to pay for it.

The next question is from Hugo Cruz of KBW.

So two questions. So on the capital, just -- sorry, costs, OpEx, if you could just clarify after 2028, would there still be more cost synergies to come from the BPSO side or not or like you'll be done? And then on capital, so can you clarify if there are any model adjustments to come again on the BPSO side? You mentioned securitizations, you mentioned DTAs, but model adjustments, I guess, is the other topic that still need to be discussed. And also, could you consider using the Danish compromise to facilitate the deal with Unipol, if you thought about it?

So after '28, I think that will not any more synergies coming from Banca Popolare. As I mentioned, on the cost side, EUR 190 million by 2027, additional by 2028. In fact, part of this EUR 300 million that I've indicated. So after '28, we will have already, in a way, exhausted all the possible synergies with BPSO. The same for capital.

So there's no other additional capital that can be extracted from BPSO, whatever was possible to be done has been done. no Danish compromise because when this probable deal of Intesa will grow through and then between Intesa and Unipol, we are talking about bank branches, so not insurance business, and this does not require any Danish compromise. So what will happen is that as far as we understand, Unipol will offer BPSO -- BPER, sorry, to acquire the 635 branches or so that they have bought from -- they will buy from Intesa. And this is -- relates only to banking business and not insurance business.

Mr. Sponghi, gentlemen, there are no questions registered at this time.

Okay. Thank you very much. Thank you all for participating. Good. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the BPER First Quarter 2026 Consolidated Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Nicolas Sponghi, Head of Investor Relations of BPER.

Please go ahead, sir. Thank you, and good morning, everyone. I'm pleased to welcome you to our Q1 2026 earnings conference call. Before I give the floor to our CEO, Gianni Giacomo Papa, please be reminded that our slide set and press release can be found on our corporate website. That said, after the presentation, our CEO and our CFO, Simone Marcucci, will take care of the Q&A session.

I will reiterate that this is for financial analysts who may request to ask a maximum of 2 questions each so that everyone will have the opportunity to contribute to today's call. Thank you very much.

I will now leave the stage to Mr. Papa, CEO of BPER.

Thank you, Nicolas. Good morning to everyone, and welcome to our Q1 results presentation for 2026. Before giving you details on the financial performance of BPER, I would highlight a number of key features of this last quarter. I'm glad to speak as the CEO of BPE post-merger with BPSO. As you know, as of April 20, the merger of BPER and BPSO is fully completed with all necessary regulatory and statutory approvals. We are now a leading player in Italy with approximately EUR 540 billion in customer loans and PFAs. We have an 11% share of the market in terms of branches and can boast a 57% share of banking branches in reach Northern Italy.

Allow me to add that the thorough work of our team has translated into an incredible stock market performance. Since April 2024, total shareholders' return is close to 250%, among the highest for Italian listed banks. The bank is heavy at work with the integration. As we speak, approximately 1,000 BPER employees are working within BPSO premises to ensure the effective extraction of costs and revenue synergies. Our target of EUR 290 million of pre-tax synergies by end of 2027 is an important number given the limited time interval we have aimed for.

As you can see on Slide 5, our teams are focusing on the 3 divisions to ensure a swift and flawless integration. We are working hard to ensure the full utilization of our complete client offer through our product factories and strategic partners. Some examples are important. Firstly, the exploitation of our digital platform in our corporate division to increase our customer share of wallet.

Secondly, BPSO customers will now be able to make use of Banca Cesare Ponti private banking platform and benefit from an additional tailor-made customer offer. In the second half, we will be merging our product subsidiaries, specifically factoring and consumer finance to reduce complexity, optimize costs and increase revenue potential. In this context, I would like to highlight the importance of our internal CIB product factory, which will play a key role going forward, especially in terms of fee and commission income. All in all, the 2 banks are now aligned to make a homogeneous product and service offer on all client segments.

Let's move on to Slide 6 for the summary of our Q1 results. Slide 6 summarizes the key financials for this quarter. In this context, from Q2 2026, we will only disclose consolidated financials. It is important to highlight that our financial performance has been partially affected by the negative impact of the total return swap and other market effects, which, as of yesterday, have more than fully recovered and lie in positive territory. As such, total revenues, which stand at EUR 1.8 billion and which decreased some 5% year-on-year would be only 1% lower if the total return swap and other market effects were not included.

Similarly, adjusted net profit, which stands some 7% lower year-on-year, would actually have been increased by over 1%, including the above-mentioned adjustments. As you can appreciate, our focus on costs translated into a further improvement of the net cost-income ratio, which landed at just over 45%. In addition, BPER continues to boast a strong level of asset quality with the cost of risk standing at 27 basis points. Our balance sheet is very solid with a CET1 ratio of almost 15% and profitability is high with an RoTE of 17%. Should RoTE be adjusted for the above effects, it would stand at 18.4%.

Let's turn to the slide to deeper key P&L items on Slide 7. Q1 results have proved to be very satisfactory given the fact that in these 3 months, a large number of employees have been focusing on merging operations on top of their daily duties. As I mentioned earlier, some P&L items have been affected by the total return swap and other market effects. As such, quarter-on-quarter, total revenues would have been only 3.1% lower without taking into account the impact of the TRS and other market effects. Some further comments are noteworthy as far as this first quarter of 2026 is concerned.

Firstly, the resilient performance of NII, as I will later explain, was supported particularly by improving commercial spreads. Secondly, commissions would have been 5% higher quarter-on-quarter should the positive effect of the bancassurance wrapper be excluded from the Q4 2025 commission line. In addition, operating costs decreased, thanks to our continued focus on operational efficiency. And finally, loan loss provisions have also shown a positive trend, decreasing by over 9% year-on-year. In conclusion, as you can see on the chart on the right, adjusted net profit would be flat versus Q4 2025 should the TRS and other market effects be excluded.

Let's move on to Slide #8. As far as 2026 guidance is concerned, the following points are key. At the end of the year, NII should be flat or slightly higher low single digit. In this respect, our working assumption is Euribor at 2%. Let me repeat, Euribor at 2%. Commissions, on the other hand, should be higher mid-single digit, continuing the same -- on the same trajectory. The cost-to-income ratio will lie at approximately 45%, in line with current results. The cost of risk is expected to be slightly higher due to our conservative approach. The current geopolitical environment is under close attention despite the fact that to date, we have not experienced any deterioration in the quality of our loans.

And finally, we expect our CET1 ratio at approximately 14.5%, including the impact of the share buyback when approved by ECB. Further information on guidance, including BPSO will be given at the business plan update scheduled for August, subject to market conditions given the current geopolitical turmoil.

Let's move to the core part of the presentation. After some 18 months since the launch of B:Dynamic Full Value 2027, a quick glance at the progress of our plan, which is fully on track is a must. The plan remains to date stand-alone and the merger with BPSO is an accelerator of B:Dynamic. Here are some highlights. On Pillar 1, new lending increased by 36% year-on-year. Net commission income growth continues to be very robust, particularly in wealth management and bancassurance.

On Pillar 2, the digital channels now process 96% of bank transactions with over 25% of new customer acquisition acquired digitally. As far as Pillar 3 is concerned, our conservative risk approach enables BPER to boast the most conservative asset quality ratios in Italy, while at the same time, we are increasing automated credit approvals for selected retail, small business and SMEs. On Pillar 4, on technology, security and AI, the onboarding for AI/Gen AI use cases on the AI/Gen AI dedicated infrastructure is completed. Our commitment to ESG-related lending continues to be strong with some EUR 5 billion of new ESG lending since the launch of this B:Dynamic. And finally, over 6,000 colleagues have already been involved in BPER's academy and training path.

Let's now turn to our AI/GenAI@Scale program, which is a core enabler of our sustainable growth strategy. As we explained at our last Capital Market Day, artificial intelligence is one of the enabling factors of our B:Dynamic strategic plan in terms of growth and modernization of the entire bank. Approximately 80 models have been developed since 2022, aiming at 120 models by end 2027 through a balanced approach of make and buy solutions to achieve both quick delivery and strategic control. AI directly supports the pillars of our business plan.

Firstly, our customer empowerment through customized proposition and a strengthened sales and distribution network, supported by chatbots and advanced support tools. Secondly, it captures economy of scale, thanks to end-to-end process automation and solutions for document management and information extraction from unstructured text. Furthermore, we achieved the bank's modernization by using generative AI to accelerate application development and increase internal productivity also through the adoption of the Copilot suite.

Our goal is not to simply develop models, but to integrate AI into the bank's end-to-end processes to generate a measurable, sustainable and compliant economic impact, also supporting risk monitoring by control functions, including AML, compliance and audit. Some examples are noteworthy. Firstly, our GPS Personnel, an evolution of our personal service model, providing an integrated advisory service in order to provide tailor-made advisory. The results have been remarkable with an increase in the productivity ratio of our network in the range of 8% to 10%.

Secondly, our SDLC platform enables the acceleration of software development and IT maintenance with further cost optimization. We expect an improvement of the productivity of our IT development centers in the range of 15% to 20%. And finally, our help desk AI assistant aimed at resolving any anomalies with which we expect to optimize costs by some 25% to 30% of these operational processes.

Let's now turn to our financial performance on Slide 13. Given the context of the merger of operations and increased geopolitical turmoil, BPER produced a set of important results. On a BPER like-for-like basis, total revenues in Q1 stood at EUR 1.4 billion compared to EUR 1.5 billion in Q4 2025. Among the main drivers, the total return swap and other market effects, which as of yesterday has fully recovered and lie in positive territory.

Diving into the details, revenues were up by 1.8% quarter-on-quarter, excluding nonrecurring effects in both Q4 '25 and Q1 '26. Excluding nonrecurring effects in Q4 '25 on NII and fees as well as the impact of a reduced number of days in Q1, core revenues were up at EUR 1.4 billion, driven by resilient NII and increased net commissions both year-on-year and quarter-on-quarter. In this context, the ratio of net commission income to total revenues further increased to 39.8%, excluding the TRS and other market effects, proving the high quality of our revenues.

Similarly, on a consolidated basis, Q1 core revenues stood at EUR 1.8 billion, up by 3.1% quarter-on-quarter, excluding nonrecurring effects in both Q4 2025 and Q1 2026. Finally, it is important to underline how BPER's productivity index measured as net revenues on risk-weighted assets has continued to improve relentlessly every quarter from 9.7% at the beginning of 2025 to 10.3%, excluding the impact of the TRS and other market effects. This is a remarkable result as it is among the highest productivity ratios in the industry.

Let's move on to the next slide, which focuses on net interest income. In the first quarter, as you can appreciate from the slide, net interest income was supported by increasing spreads, which was the main driver of the positive commercial dynamics. In fact, on a like-for-like basis, NII stood at EUR 820 million, up by 1.9% quarter-on-quarter, excluding a one-off component of EUR 13.4 million in Q4 2025 and a negative days effect of EUR 18.2 million in Q1. Similarly, on a consolidated basis, NII stood at EUR 1.1 billion, up by 1% quarter-on-quarter, excluding the above-mentioned one-off item in Q4 2025 and the negative days effect in Q1 2026.

Please note that loan volumes in the quarter were resilient and stable, an important achievement given the significant loan growth in Q4 2025, driven primarily by retail and factoring. That said, loan growth for BPER stand-alone increased 3.6% year-on-year. At group level, loan remains substantially flat. Finally, I would like to highlight that our NII sensitivity to 100 basis points movement equal to EUR 225 million in the quarter versus EUR 235 million in the previous quarter.

Now let's move on to the development of net commission income. Despite the focus on the merger of operations and the seasonality of the first quarter, which is normally weaker, the trajectory of net commission income continues to be robust with a 5% increase year-on-year for BPER on a like-for-like basis. To date, this performance is well above the targets of our plan. The mere fact that net commission income contributing on total revenues stands at 39.8%, including the beforementioned adjustment is a clear indication of the increasing high quality of our revenues.

Our focus on capital-light, high-quality wealth management products is proven by an increasing proportion of this versus total commissions at almost 46% of total from approximately 44% 12 months ago. The remarkable performance of wealth management fees is underlined by an increase of almost 8% in the last 12 months. Please note that bancassurance fees in the last quarter are always positively influenced by performance fees.

Taking into account this effect, net commissions would be up by 5% quarter-on-quarter. That said, the most important contributor remains banking service fee, which landed at over EUR 275 million. Although the contribution of these fees is coming down as a percentage of total commissions, we expect this to pick up going forward, thanks to the integration of the 2 banks.

Let's move to the next slide. As you can appreciate, since the launch of B:Dynamic Full Value 2027, TFAs, one of the most important driver of commission income, have been growing from approximately EUR 300 billion to almost EUR 330 billion on a like-for-like basis and to over EUR 410 billion with the new group perimeter. This is primarily as a result of BPER being increasingly perceived as a relevant player in Italian asset gathering. As already mentioned, the integration of BPSO allows us to further strengthen our focus on asset gathering activities and will ensure the exploitation of further commission-related potential.

Changing our focus on the quarter. As you can see on the slide, TFAs were impacted by the migration of one customer with no P&L impact and by market effects. Neutralizing these effects would leave us with TFA substantially unchanged in the quarter. Noteworthy to emphasize the fact that AUM's net inflows amounted to approximately EUR 800 million in Q1, while market effects had an adverse impact of some EUR 1.4 billion. Finally, it is important to note that at year-end, the loan-to-deposit ratio stood at 77.3%, stable quarter-on-quarter. This will enable us to continue to grow the loan book and to transform client liquidity into AUCs and AUMs.

Let's move on to our performance on the cost side. Cost performance has been extremely satisfactory. Total costs were down by 1.6% year-on-year for BPER stand-alone. The actions deriving from B:Dynamic continue to reduce the cost-income ratio, which stands at 46%, excluding the TRS and other market effects compared to 46.7% in Q1 '25. HR costs were up by 1.7% year-on-year, mainly driven by the increase of national collective labor agreement, while non-HR costs were down by 7.1%, thanks to decisive actions on cost rationalization.

On a consolidated basis, the cost-to-income ratio improved to 43.3% with above-mentioned adjustments from 45.2% in Q4 2025. In terms of the combined group, total headcount stood at 23,000 with an increase of approximately 400, driven by temporary workforce hire to support BPSO integration. As already mentioned, as a result of previous agreements, we are expecting over 220 exits in 2026.

And furthermore, we expect mainly in the same year, 800 additional exits as agreed in December 2025 with the unions aimed at the implementation of a generational change program in the bank. As a final note, the strong improvement on non-HR cost is the result of our relentless focus on cost efficiencies. As per our plan, we have significantly reduced outsourcing and consultancy costs.

Slide 18. As you can see, the trajectory of the cost of risk is very positive. LLPs came down by 22% in the last 12 months, while the cost of risk stands at 24 basis points, slightly lower versus 2025. This is also a result of our very high coverage level. In the quarter, our continued conservative approach translated into an NPE coverage ratio of 56.8%, slightly lower due to the sale of highly covered UTP single names. Including BPSO, the cost of risk stands at 27 basis points with an NPE coverage ratio stable at 52.8%.

That said, our coverage ratio remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality. Our conservative approach is further confirmed as we report a Q1 coverage ratio on performing loans at 0.6%, once again, the ratio is among the highest in Italy. Let me add that in Q1, total overlays stands at circa EUR 180 million with an increase of approximately EUR 40 million.

Let's move on to asset quality on the next slide. As I mentioned in the previous slide, Q1 2026 was affected by the sale of a UTP portfolio of single names. For BPER stand-alone, gross NPE stocks were flat versus the previous quarter at EUR 2.3 billion, and the gross NPE ratio remained unchanged at 2.4%. In any case, as in the previous quarter, the quality of our loan book continues to show a very healthy state with net NPE ratio standing at 1.1%, one of the lowest in the Italian banking system. This is further confirmed by stable Stage 2 and stable past due loans. As far as the combined banks are concerned, similarly, the net NPE ratio stands at 1.1%, in line with BPER stand-alone.

Having finished with asset quality, let's move on to the development of the bank's risk-weighted assets. As you can see, in Q1 2026, total risk-weighted assets of BPER, including BPSO, were basically flat at EUR 80.2 billion.

I will now turn to organic capital generation on the next slide. Despite the acquisition of BPSO and the total return swap and other market effects, the combined CET1 ratio stands at a very comfortable 14.9%. BPER continues to generate a very high level of organic capital. In the quarter, BPER generated EUR 537 million of CET1 capital or approximately 67 basis points. This result reaffirms BPER position as a highly resilient institution.

Let's move on to the balance sheet items on the next slide. As you can see, in Q1 2026, as a result of liquidity optimization, the LCR stands at 157% and the NSFR stands at 131%, underlining that the bank's liquidity ratio remained high. And finally, the loan-to-deposit ratio stood at 77.3%, one of the lowest among its peers, which will enable us to continue to grow the loan book through increased loan origination and to transform client liquidity into AUCs and AUMs, thanks to our ability to attract customer liquidity.

Let's move on to the bond portfolio on the next slide. Turning now to the bond portfolio. Italian government bonds increased to EUR 22.2 billion and accounted for around 51% of total bonds. As a result of portfolio rebalancing, the total bond portfolio modified duration was 1.9 years, while the Italian govies portfolio modified duration was 2 years compared to 2.3 years at the end of 2025. Please note that the annualized average yield of the financial portfolio was 2.4% in Q1, and we expect the average yield to increase during 2026.

Let's move on to the next slide. On Slide 25, we report the divisional financials for BPER on a like-for-like basis. I would like to draw your attention to the important results achieved on total wealth commission income across our divisions, which amounted to EUR 259 million, an increase of 8% compared to Q1 2025. These results underline the important focus of the group on asset gathering activities.

Let's move to the final remarks. In conclusion, as of April 20, we are now one bank with a very strong position in rich Northern Italy, and we are well placed to play a leading role in asset gathering and fee generation in the future. We are working very hard to ensure the successful and flawless achievement of cost and revenue synergies, which I underline is an important target given the limited time frame. That said, and despite an important focus on merger operations, business growth has been positive, thanks to the strength of our commercial networks.

Asset quality is one of the highest in the Italian market, coupled with very sound coverage ratio. Although we monitor the current geopolitical turmoil very closely, we are not experiencing any deterioration in the quality of our loan book. In addition, our capital strength with a CET1 ratio of 14.9% and our continued internal capital generation capacity place us in a comfortable position going forward. Finally, before taking your questions, please be reminded that we are planning an update of B:Dynamic Full Value 2027 on August 6, should the geopolitical and hence market conditions not deteriorate.

We're now ready to take your questions. Thanks.

The first question is from Marco Nicolai, Jefferies.

A few questions. First one is on NII guidance. You guide for flat to low single-digit growth for 2026. Can you just remember us the rate assumption you use because by now, the market sees at least a couple of hikes this year. So Euribor are you taking into consideration in your guidance? And also in terms of loan growth, if I'm not wrong, you were targeting 3% year-on-year, which is pretty much what you delivered in the first quarter of this year. So taking all this into consideration, higher rates, perhaps margins pretty solid and loan growth, perhaps we should expect you to be at least in the upper part of your guidance for this year? So this is the first question.

Second question on costs. If I look at the year-on-year performance you delivered this quarter in costs, you're down like 5% compared to the first quarter '25, if I look at the BPER plus BPSO cost base. And you closed the merger just in April. So this doesn't even include anything from the benefits of the merger. So my question is what you're doing, especially in the section of the admin costs where the performance has been very, very solid. And anything you're doing on the BPER level, can you replicate that on the BPSO level? And is that included in your synergies targets as well as taking into consideration the slide on AI, is that included into your current cost guidance and expectations? Or perhaps this is something we can look forward to in August when you will update us on the longer-term targets?

And last question, just a follow-up on the TRS. If I understood correctly, you said that you recovered the loss of the TRS and other market effects you had this quarter. So how much was that loss? And shall we just consider that the deadline in the next quarter is just going to be, say, above EUR 100 million, recovering entirely the loss you had this quarter?

Thank you, Marco, for your questions. So in as much as guidance for NII is concerned, as we mentioned, we indicated that we are considering a Euribor ECB rate of 2%. So considering this change, we expect net interest income flat or up low single digit, and is a prudent assessment, absolutely. But then I will pass to Simone to give you more color on these assumptions and guidance.

Thank you very much. Mr. Papa, as you mentioned during the presentation, our forecast for NII has been based on the conservative approach 2% also because the market situation is quite stable at the moment. You know because we have declared in the presentation our sensitivity. So today, the Euribor is 2.2%, depending Euribor 3 months because this is the one that we use for our simulation, depending how the evolution of the market will drive us in the next month, we will adapt clearly the forecast for net interest income.

Yes. Then we have performed in the first quarter growth in loans and BPER stand-alone, as you mentioned, 3.6%. In our business plan, the one we presented in October '24, we indicated a growth of 3% CAGR throughout the plan. So we are on the right trajectory. Nevertheless, if you look at the combined entity, we are flat quarter-on-quarter for the reason that, obviously, BPSO being a target of an offer was inflating in a way their activity. And since we took over, we have been looking at this transaction. Nevertheless, we do expect to continue on the trajectory and close the year confirming our target of the growth CAGR.

In terms of costs, well, yes, we had a good performance on cost. This is something that continues quarter after quarter. We have been reducing the non-HR cost, thanks to the reduced outsourcing and consultancy cost. This is something that we had indicated also in our strategic plan back in October '24. So you see that whatever we presented at time, we are keeping what we said, and we keep on going in that direction. We have, let's say, taken over officially the bank as BPSO with the merger that happened the technical merger on the 20th.

So we will now start looking also at the cost on a combined entity. And we do expect to deliver the synergies on cost that we have indicated in our offer, so the EUR 190 million, which given by 2027, which given the limited period of time we have, so it's slightly more than 18 months, I think is quite a strong and important amount that we are going to deliver.

Having said so, in any case, we are relentlessly looking at the reduction of costs. We have indicated that we have in the course of the year, we will have further exit of HR or colleagues. 220 coming from previous agreements and most of the 800 colleagues that were agreed in December last year. So we will have a further decrease on the HR cost, but also on the non-HR cost, we will keep on looking at different ways of optimizing the cost side of the business.

In this, obviously, we are helped also by the deployment of AI. I indicated in my script that we have -- we are considering further reduction, especially on the back office activities operational side Nevertheless, we have to consider that the deployment of AI has a cost of implementation. So the results of this application of AI to these activities will be seen close more on the 2027 than in 2026.

Last question was about the TRS, and I will ask Simone to answer this question, please.

Thank you very much, Mr. Papa. As you mentioned during the presentation, at the 31st of March, we had a negative effect from TRS and other market effects around EUR 75 million. At the date of 5th of May evening, we have totally recovered and we are positive around above EUR 30 million.

Consider that you know that at the end of last year, we had -- we indicated with transparency that the TRS, which was a one-off item was positive for around EUR 30 million. So this is the level of indication we can give.

The next question is from Lorenzo Giacometti, Intermonte.

Okay. So the first one is if you can guide us through basically the moving parts of your CET1 ratio leading to the 14.5% you target at year-end '26. The second one is if you can give us some color on the penetration of bancassurance products and the wealth management trends within the BPSO perimeter. And the third one is more of a strategic one. So given that we may see further consolidation in the Italian banking sector in the next year, how should we look at BPER in this context? And I mean, will it play an active role or more of a by standard one?

Thank you, Lorenzo, for your question. In as much as CET1 ratio is concerned, we gave a guidance of 14.5% year-end with considering also the SBB of up to EUR 750 million or 3% of capital, whichever is the number. And this has an impact of 94 basis points. And we still on a conservative basis, consider the full settlement of the TRS, which has an impact of 82 basis points.

So as you know that we have always a conservative approach. Why do we have a conservative approach? Because we have filed application with the ECB yesterday or 2 days ago for the SVB. We need to wait for their approval. The ECB will take their time to give us their approval. Depending on when the approval comes, I mentioned already, I think, in the previous quarter when we presented the numbers that if the approval comes and they take the full period of time that they have at their disposal, this will be close to the end of July.

Therefore, the SVB will start only in September. You don't run an SVB in August. And therefore, we need to really understand what is going to be our position towards year-end. So having a conservative approach, we decided to have 94 basis points, so the full deployment of the SVB, EUR 750 million and to keep the 82 basis points, the EUR 650 million that is related to the TRS.

The other question was about the penetration of bancassurance in bps. This is one of the avenues of further development of business in the combined entity. Today, BPSO has a penetration of bancassurance in terms of revenues of 2% in terms of commission of 2%, whereas for us, so BPER on a stand-alone basis, we're talking about 6%. So you see here what is the growth that we can project. But obviously, this cannot happen by the end of '27 because, let's say, we had on the 20th of April, the integration, the technical integration of the 2 banks.

The real work will start now because we need to integrate the 500 branches of BPSO and to bring BPSO on to our level of cross-selling activity. So it will take some time, but the aim is to improve our numbers, so to improve the 6% because we want to further grow and we do have opportunities of growing in bancassurance activity and to bring BPSO on to the same level of today.

As much as consolidation is concerned, today, we are very busy in integrating BPSO. The acquisition, the merger of BPSO into BPER was an important step for the new bank, the new entity, the combined entity. It's placing us among the top player in the Italian banking sector. We see a lot of opportunities, very good opportunities to further grow. I mentioned that we have an 11% market share of branches in Italy. We have 57% of our branches in Northern Italy. In Lombardi, we have almost 18% market share of branches, 25% in Liguria, 14%, 15% in Emilia Romania. So we are very well placed in the richest and most active part of Italy.

Now we have to bring this 11% or 57% of branches up to an increasing the market share, the commercial market share. So the market share in activity has also to grow. So we have a lot of opportunities there to grow. So I would say that we are concentrated very much on internal activity, organic growth. But obviously, as I mentioned also in the past, we work in this market. We are monitoring the market. We are seeing and reading what is happening almost every day. So bearing in mind that for us, the main activity today is to integrate completely Sondrio, never say never. Let's see what happens and then we decide what to do. But today, there's nothing on the table, just full integration of BPSO.

The next question is from Ignacio Ulargui, BNP Paribas Exane.

I just have 2 questions. One is on the cost progression in the year. I mean, looking to what you were flagging before, Gianni Franco, on the integration of the factories, especially in factoring and consumer credit, the departure of employees agreed with trade unions. How should we think about the cost progression in the year? Should we expect the synergies to start being visible in the coming quarter? Or that should be more a second half improvement in terms of starting to extract the EUR 190 million of synergies?

The second one is on the commercial activity. I've seen that corporate lending in BPER stand-alone has been growing quarter-on-quarter. Just wanted to get a bit of your thoughts on how should we think about corporate lending in the current context, if you have start to see any slowdown in demand from corporates? And linked to that, on the deposit front, in the quarter, there was a decline probably explained by seasonal factors, but I wanted to see, I mean, how do you see deposit evolution going forward?

Thank you, Ignacio. So cost progression in the year, I mentioned that we have around 220 colleagues coming from previous agreement and 800 that will be leaving and coming from the latest agreement that was signed in December last year. Consider that this 800 will exit in batches. They will start the first batch, I think, the end of the third quarter, so by the end of September. And then we have progressively during the months going towards the end of the year.

So let's say, the cost saving on this -- under this point of view will be really reflected in 2027 because we have the cost for sure until the end of September for the EUR 800 million. So this is where we see the impact -- the positive impact going forward. The integration of the product factories, so the one related to factoring activity and the one of consumer financing will happen probably in the fourth quarter, beginning of the fourth quarter because it takes also some legal framework that we have to go through in order to make sure that we do this.

Also, this will bring for sure, a reduction in cost -- although in as much as the consumer financing business is concerned, the entity that is BNP is a very small one. And therefore, there, we will not have very large savings. Nevertheless, quarter-on-quarter, we do expect to keep on reducing also non-HR cost. Therefore, we landed -- we indicated as a guidance a cost-to-income ratio of 45% to close or around 45% close to year-end. We hope that we'll be able to beat this ratio. Considering also that we will put a lot of effort in growing the revenue side because obviously, cost income is made up of 2 elements, the cost on one side and revenue on the other, and we want to grow there.

In terms of commercial activity, so far, we have not experienced a deterioration of the activity or a slowdown. Obviously, the impact of the geopolitical situation, if it's not sold, will happen in the months to come. But so far, we didn't witness any particular situation. It's a matter of fact that if we look at BPER on a stand-alone basis, in the first quarter, we were able to grow 3.6%, which is, I believe, a very good number considering the fact that we are really making our way in the corporate business. We are growing on the retail business, and we keep on having a very strong position in terms of mortgages for families and individuals. And we are growing also our activity on the transformation of liquidity into AUM and AUCs.

And as much as liquidity is concerned, first quarter, as you mentioned, is always -- you have always seasonality. Nevertheless, for us, to gather liquidity is one of the most important component of our activity. This is something that we have been pushing in the last 2 years very much because having liquidity allows us to grow on the loan side, without having problem in terms of liquidity, but also to rotate liquidity and to transform liquidity into AUCs and AUMs. And here, I think we are making our way, especially thanks to Banca Cesare Ponti on the private banking side, but also on the activity that is done by our retail colleagues.

The next question is from Mateo Panchetti.

I have 2 questions, please. The first one is still on capital. You have said that the 14.5% target included the share buyback and the TRS transactions. But should we consider the buyout of the minority of Sondrio and other potential impact separately, meaning that the 14.5% should be considered more as a floor rather than an actual target?

And my second question is on cost. You clearly said that you have a lot of cost-saving initiatives during this year with the phasing in between 2026 and 2027. But will you be able to provide an absolute cost guidance for this year?

So thank you for your question, Matteo. So as much as CET1 is concerned, yes, 14.5% is a floor. You know that we have always a conservative approach. So minorities are already considered. So it's really the floor. But as I mentioned before, we have also a conservative approach because we don't know when we are going to get the approval from the ECB. And therefore, we don't know what the full impact would be.

So we decided to indicate full impact by the end of this year for both TRS and SVB. We have a lot of cost-saving initiatives in the sense that we have been having this in the last 2 years. We have -- we keep relentlessly to work on reducing costs. I would like to remind that 2, 2.5 years ago, this bank had a cost-to-income ratio of around 62%. Today, we landed at 45%. Therefore, I think that we did already a hell of a job here. We'll keep on pushing in that direction.

In August, when hopefully, we are able to present our revised plan, we will give guidance, better guidance for '26, but we will give guidance also not only for '27, but also '28 and '29. So the guidance will go beyond the expiry of, let's say, this current business plan that, as you know, ends in 2027.

The next question is from Andrea Lisi, Equita.

The first one is an update on the share buybacks on the 3% of the capital. You have indicated that on the CET1 guidance that you assume include the cost of the share buyback plus the cost of keeping the full TRS. So should we deduct in some way that the share buyback will be executed not by using the TRS, the proportion TRS, but by buying shares directly on the market. And yes, this is the first question.

The second is I have seen in the slide regarding capital movements in the quarter that you have accrued 53 bps for distribution, 67 bps of organic capital generation driven by net income. So this implies a ratio of distribution over capital generation of kind of 80%. So should we interpret it as an increase in the payout ratio from 75% to 80%?

Really last one is if you can provide an update on the hedging portfolio, if you have some data on these elements on the contribution to NII, what you expect would be helpful.

So thank you, Andrea, for your question. So we have not decided yet what to do in as much as the SVB, whether utilize the TRS partially totally or not. We don't know exactly when we can start with the SBB. So as I mentioned, taking a conservative approach, we have decided to indicate and to deduct from the CET1 ratio both costs.

In as much as the distribution is 75%, which is what we have decided and indicated in our strategic plan back in 2024. Obviously, I mentioned already several times because maybe I'm already anticipating a question coming from some of you. We always said that if also after the merger of BPSO and bearing any geopolitical and macroeconomic situation because you never know what is happening in the world, we have this constant generation of organic capital. And therefore, we can land with a very positive spin in terms of net profit, we might consider also a higher distribution on that. But in as much as the first quarter is concerned, we put aside 75%.

Your third question because I didn't get, if you can repeat it, please.

Yes. And that was about the replicating portfolio, if there is any indication you can provide.

I'll put through Simone.

Thank you very much. As we already stated in previous presentation, we don't have a real replicating portfolio, but given the huge amount of mortgages and loans that we have in our balance sheet, we are one of the banks with more percentage of loans over assets among the Italian system. This is our natural hedging. So we have clearly derivative but not a clear structure of replicating portfolio. If you mention the amount of interest that comes from bonds and swap, this is increasing clearly quarter-over-quarter.

The next question is from Giovanni Razzoli, Deutsche Bank.

The first one is again on CET1 because it seems to me that there is a bit of confusion about the way you treat the TRS and the share buyback and the CET1 ratio guidance at year-end. So to make it simple, let's assume that tomorrow, the ECB approves the share buyback, which has an impact you mentioned of 94 basis points on capital. Is it fair to assume that you will reverse then 82 basis points of cost of the TRS so that at that point, your CET1 ratio will go up by 82 basis points to well above 15%.

And then if I also assume the other moving parts on the CET1 ratio, including the merger with Popolare di Sondrio, which on my numbers should contribute around 40 basis points of more capital because of the issuance of the new shares and the impact on the minorities, your CET1 ratio will be well above 15%. So what are the moving parts which I'm missing here to stick to your 14.5% guidance, which you interpret as something between 14.5% and 15%.

And the second question is on the disposal on the UTP portfolio. If you can please share with us what is the gross amount that you have sold?

Thank you, Giovanni, for your question. So first question, yes, you can assume in assumptions is 3 thing and then you can assume that if we receive the authorization from the ECB for the SVB and we start tomorrow, we might decide to utilize partially or totally the TRS. In that case, the assumption is that we will have a charge of 94 basis points for the SVB and a release of 82 points for the TRS total or in part in case it's in part, but we haven't decided yet what to do. And therefore, conservatively, we have decided to charge both to the capital.

For the part related to the 40 basis points minorities and so on and the way in which we build the 14.5%, which, by the way, I mentioned before, there was another question is the floor, conservative approach, the floor, which means we could maybe be in a better position. I pass to Simone.

Yes. So thank you very much, Mr. Papa. Yes, I don't comment what already Mr. Papa has mentioned about the utilization of the TRS. But as you correctly mentioned, the 14.5% floor is already including also the benefit effect of the minorities. You have also to take in account that we have included business dynamic that will generate risk-weighted assets as well as a little bit of operating risk-weighted assets like all the years. But we confirm what you mentioned.

Sorry, I forgot to ask a follow-up on the share buyback. Can you confirm that so far, the share buyback is not intended to the cancellation of the shares or have I missed something?

For the time being, yes, this is the way in which has been approved by our Board. And I put through Mr. Rodilossi for your second question related to the UTP portfolio.

Thank you for the question. The gross amount was about EUR 70 million, EUR 67 million for the -- to be precise.

The next question is from Noemi Peruch, Morgan Stanley.

I just have a few follow-ups. So on the share buyback, is there any event that would trigger the cancellation of the shares? Or is it something that we should take for granted? And then on the moving parts on capital, I wanted to make sure that I have all the moving parts correctly. Are there any other moving parts related to the TRS in the next 9 months? Or did you get the full deduction related to this instrument with Q1? And if you can update us on your SFTs program, please?

Thank you, Noemi, for the question. So in as much as your first question is concerned, the SVB cancellation. For the time being, we announced that the shares will not be canceled, but I already mentioned also in other meetings that we have a constant discussion and approach with the Board if and when the Board decided to proceed to the cancellation of the shares, we will cancel the shares in total or partially depending on the utilization we'll make that we have share program, for instance, for our managers and so on and so forth. So for the time being, we stay with the noncancellation of the shares. And I'll ask Simone to take the second and third question.

Sorry, related for the moving part of the CET1 ratio, the TRS in the next quarter, we forecast an impact for around 10 bps, so therefore, negligible. And related to the SRT, as we have already mentioned, we are ready -- we have the engine ready to, let me say, launch the SRT whenever we think we need at the moment, we don't plan this quarter to launch any SRT. But as mentioned before in the previous presentation, we are ready in any moment when the Board will decide. Given the current capital structure, giving a CET1 ratio of 14.9% I don't think that we feel compelled to do a CR for the time being.

But as Simone mentioned, we have the structure already. And if we decided to move for different reasons, not related to capital, by the way, but because maybe interest rates are in the right -- following the right direction and so on, we are ready to move in that direction.

Next question is from Sofie Peterzens, Goldman Sachs.

Here is Sofie from Goldman Sachs. So my first question would be, how should we think about the capital impact from the final merger in Q2? And then my second question would be on risk-weighted assets. They were broadly flat this quarter. But how should we think about the future risk-weighted asset reductions from kind of moving BPSO models to more IRB models? And then my final question would be like how do you think about kind of upside risk to the EUR 100 million revenue synergy target that you guided for? Are you seeing better prospects to grow your revenues than initially expected? Or do you think the EUR 100 million is still very valid?

Thank you, Sofie. I take the third question about synergies target and then Simone, our CFO, will answer the first 2 questions. In as much as synergies are concerned, we indicated EUR 290 million when we launched the offer for BPSO. And for the time being, we stand at EUR 290 million, given the fact that by 2027, given the fact that we have basically 18 months to proceed. Consider that until the acquisition of the minority shareholders, we could not do anything because the bank was a listed one. So we had to respect minorities rights and so on and so forth.

So now with the cancellation of the shares and the full integration of BPSO into our bank, we have this EUR 290 million, which we consider a very ambitious target given the fact that we have 18, 19 months to deliver it. Nevertheless, and this will be treated when we present the update of the plan on the 6th of August, we will give also an indication and guidance on what will happen after 2027. So we give an indication for '28 to '29 because we do expect to have and to be able to produce further synergies, both on the cost side and on the revenue side, but that cannot be delivered by 2027.

So I'm positive on the fact that we can have better synergies. And historically, BPER when has merged other banks into the latest acquisitions we made has been always able to deliver better synergies than what was indicated. But this will happen after 2027. So we stick to the EUR 290 million for the period until the end of 2027. And Simone will take your first 2 questions.

Yes. Thank you very much, Mr. Papa. As mentioned by also one of your colleagues before, you can assume and it's already included in the 14.5% floor that we have forecasted for year-end, you can assume from M&A operation around 40, 50 bps positive effect in relation to the risk-weighted asset effect we are taking account overall between business dynamic risk-weighted asset and other effects around 40, 50 bps.

The next question is from Luis Manuel Grilopratas, Autonomous.

My first one is on the stand-alone cost savings. From memory, you target EUR 280 million cost savings across your stand-alone business plan. I wanted to ask you how many of the EUR 280 million cost efficiencies were already executed? And also, could you please disclose whether there is any overlap between these cost savings with the EUR 190 million cost synergies from the Sondrio combination?

Then my second question is on cost of risk. So your full year cost of risk guidance appears quite conservative, considering the performance that you already achieved and asset quality metrics seem to be improving. I wanted to ask you if you are seeing like any early signs of deterioration given the macro uncertainty? And have you updated already your IFRS 9 models to reflect weaker GDP expectations and whether we should expect any top-ups in cost of risk in the coming quarters?

Thank you, Luis. So if we look at your first question, so the stand-alone cost savings, I don't have the exact number with me, but we are beyond the plan. So we are performing better than what we had indicated in our business plan. We will provide you with the exact number, by the way. So it's not on the top of my mind now, so -- but we are better than expected and what we have planned. And this is not including the EUR 190 million cost synergies coming from BPSO because, in fact, when we presented our business plan on the 10th of October 2024, we didn't have under our radar screen BPSO as a possible acquisition target. So the EUR 290 million was on BPER stand-alone. And so as I said, better than plan. And on top of that, we are going to add EUR 190 million synergies coming from the acquisition.

Cost of risk, conservative, and then I will ask my colleague to give you a more specific and technical answer. But the geopolitical and macroeconomic situation deriving from the geopolitical situation gives us the want to say not the opportunity, but for sure, push us to be conservative in indicating the cost of risk, although I am with you with the fact that this is a very conservative approach. But we don't know what to expect. And more than that, we don't know when this geopolitical crisis will end. I will ask Mr. Rodilossi to give an answer.

Our CEO has already highlighted the key points. Nevertheless, we can remark that overall, the asset quality remains very solid. But given the current geopolitical situation, we have overweighted our downside scenario to take into consideration the uncertainty and the volatility of the scenario itself. So at the moment, we do not observe any deterioration. Anyway, we are considering also the possibility of even a recession in our scenarios. But thanks to our prudent approach, we can say that we can face the crisis with the eventual crisis with relative confidence without the need of drastic measures.

And about BPSO and their models, we are working and we think that for BPSO exposure the level of the coverage will converge to the BPER 1.

And does that mean that the top-up -- since you said that you overweight the downside scenario, does that mean that there was a top-up in cost of risk this quarter? Or shall it happen only in Q2?

Well, in Q2, we will apply the BPER framework. So we will -- we should have the effect in the Q2 itself.

The next question is from Juan Pablo Lopez Cobo, Santander.

I got one regarding the cost-to-income guidance, the 45%. I'm struggling a bit to get to that number, to be honest. If I look to the main P&L items, we should expect NII to evolve positively during next quarters, fee income probably as well. The financial income impact in this quarter will be reversed. And then we will -- we should expect cost savings and synergies to come during the next quarters. So am I missing anything here? Why do you expect cost to income to remain at the same level at this quarter?

And maybe a related second question, a bit more detail regarding the cost savings. You just mentioned that because the merger happened just in April, you were not able to get any synergies. Could you give us any indication of the synergies? You mentioned 25% for 2026. That should apply both for cost and revenues.

Another question is the 400 temporary employees. Could you give us any indication of the impact and timing when that will disappear?

Thank you, Pablo, for your question. So cost income guidance '26. As I mentioned, income ratio is made up of 2 items, cost and income. We do expect -- I mean, as much as income are concerned, we have indicated that in terms of net interest income, we do expect the NII being flat or up low single digit. Whereas for net commission income, we do expect those to grow in the upper mid-single digits. So we do expect to see a positive indication there.

And as I mentioned, we will have also a partial reduction of cost. One, the most evident and earlier one will be from the exit of the first batch of people. So the 220 colleagues that will be exiting the bank from the old agreements that were reached in the past by the bank. And then, progressively, we will have a smaller saving coming from the 800 colleagues that will start exiting the bank by the end of September. So the first batch will bring 3 months saving and then going forward, but the total, let's say, benefit will be very evident in 2027.

We had the famous this 400 temporary workers that have been helping us in the merger. So we'll see what happens now with the merger because as I mentioned, we had the technical merger taking place on the 20th of April. Now we are progressively having this temporary workers leaving the bank as long as we go for the integration and the activity related to the integration.

As mentioned, the synergies, both on cost and on revenue side will be deployed by 25% in this year and 75% in 2027. Obviously, this is an assumption, but we'll be driving to deliver more in 2026. Let's see whether we can do better than the 25%, but this is the indication that we can give today.

The next question is from Hugo Cruz, KBW.

Just a couple of clarifications. So first on the impact of the rate rises, you give the sensitivity. But I was wondering how quickly does that get reflected in your NII? Should -- if we believe rates -- rate hikes go up this year, should we see a benefit already in the first quarter after the rate hikes or before? Or does it take a bit longer to reflect in your numbers? So that's the first question.

And second, the TRS, I'm still a bit unclear about how it all works. In Q4, you disclosed a CET1 impact of 62 basis points. Now you're talking about 2 I'm not sure if that's in the Q1 number or if it's already mark-to-market for the latest prices. And then I think you mentioned another 10 bps negative impact in the next quarter. So is this all going to the P&L? Or there's some part that goes against capital? If you could clarify that would be helpful.

Thank you, Hugo, for your question. I'll ask our CFO to take the 2 questions.

Thank you very much, Mr. Papa. Regarding the impact on the rate increase, we clearly -- we don't have the impact immediately, but we can assume that after 1 quarter, we have half and then the full after -- in the following quarter. This is our assumption. Regarding the TRS, we have 10 bps this quarter, and we will have 10 bps we assume next quarter on the capital clearly.

Excuse me, last year, we said 62% was the impact on 2025, and we had additional impact in 2027. So maybe this was the missing part that you couldn't maybe remember. So the overall impact is 82 of which 1 impact was already calculated in 2025 when we indicated the CET1 ratio and the differential, which is the 20 basis points is 10 bps the first quarter and 10 bps in the second quarter, but was already indicated last year.

Next question is from Adele Palama, UBS.

Sorry, only a few clarification. So on the NII guidance, I understood that 2% 3-month Euribor is embedded as an assumption, but which is the assumption on the lending growth for 2026 for the combined entity? And then on the replicating portfolio hedging contribution for first quarter, so for this quarter, how much is the contribution into the NII?

Then on fees, so into the first quarter, how much is the contribution from upfront fees? And then which is the market performance that is -- the market performance assumption that is included in the guidance? And then which is the tax rate that we should assume for 2026, 2027 as well? And then a clarification on the RWA. So you mentioned that the alignment of the credit RWA for Sondrio should bring around 40 to 50 basis point impact, I guess, is positive. Is that included in the 14.5% target or is on top?

Thank you, Adele. So the guidance for -- in as much as loan growth is concerned, as I mentioned, we believe that we'll be able to have a growth of around 3% in order to be able to deliver the 3% CAGR that we mentioned in our business plan, the strategic plan presented in 2024. Last year, we were at 3.2%, go by half 3.3%. So we see, in any case, a pickup going forward. So we'll stay broadly in line with that growth.

In as much as the other questions are concerned, I think that in as much as the replicating contribution is concerned, Simone, our CFO, already answered that we don't have a replicating portfolio basically. So there's no contribution here coming from a pure replicating portfolio because we have a natural one. And therefore, this is already embedded in our numbers. In as much as the upfront fees, historically, we have around EUR 110 million, EUR 120 million per year -- and I think we are around EUR 30 million, EUR 35 million on quarter, something like that.

So I think also in this -- in the first quarter, we had this. As a matter of fact, maybe this quarter, we had slightly more because we had -- we participate for our customers in the issuance from the government, the Italian government of BTPs. And we had -- we bought for our customers EUR 1.4 billion, and we had also issuance of certificates, which bring upfront fees. But the overall amount usually, we are talking about, on average, EUR 30 million per quarter. We try not to have upfront, but to stay on the recurring fees coming from all the different products. Tax rate, I'll ask Simone to answer.

The tax rate that you assume for year-end is 35% following the new law of last year that has increased the taxation of 2%. Regarding the last question that you mentioned, I said before that we have 40, 50 bps, not for the risk-weighted asset of BPSO, but because of the minorities M&A operation. This is what the positive effect that we have. If not clear, maybe we can clarify bilaterally.

Okay. But like then the RWA -- I mean, the RWA of Sondrio with BPER, which will be the effect? Are you considering any effect?

Thank you for the question. The answer is a little bit technical because we are not authorized to use our internal models on BPER exposure. For this reason, we submitted in September 2025 a letter comply a plan to ECB that authorize this plan and the plan foresees to apply a simplified approach on RWA calculation on the stock of BPSO exposure based on BPSO models and this is the transition approach that we use also for the former UB transaction. So the letter to compliance plan forces also to redevelop our models, including BPSO exposure. Anyway, the application package is planned to be submitted by the end of 2027. So the bottom line is that we expect a stability of RWAs on BPSO exposures.

Gentlemen, Mr. Sponghi, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Okay. So thank you very much for participating to our session. And obviously, we are always at your disposal for a one-to-one interaction. Thank you. Bye.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Fourth Quarter 2025 BPER Consolidated Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Nicola Sponghi, Head of Investor Relations of BPER. Please go ahead.

Thank you, and good morning, everyone. I'm pleased to welcome you to our full year 2025 earnings conference call. Before I give the floor to our CEO, Gianni Giacomo Papa, please be reminded that our slide set and press release can be found on our corporate website.

That said, after the presentation, our CEO and our CFO, Simone Marcucci, will take care of the Q&A session. I will reiterate that this is reserved for financial analysts whom I will kindly request to ask a maximum of two questions each so that everyone will have the opportunity to contribute to today's call.

Thank you very much. I will now leave the stage to Mr. Papa, CEO of BPER.

Thank you, Nicola. Good morning to everyone, and welcome to our end of year results presentation. Before giving you details of the financial performance of BPER, I would highlight a number of key features of this last year.

2025 has been an intense year for both BPER and BPSO. Since August, the two banks have been extremely busy with the integration. Please note that the update of B:Dynamic | Full Value 2027 will be presented in the second half of this year. The combined group has been able to register outstanding results, thanks to a strong focus on commercial activities, both at revenue level and on the cost side.

As you can see on the slide, despite a complicated macroeconomic context and ongoing geopolitical headwinds, we've been able to increase customer loans and TFAs to EUR 551 billion. And as you will appreciate later in the presentation, our capital position remains strong despite the BPSO acquisition, our business growth and the total return swap we implemented in Q4 '25.

Financial year 2025 has proven to be a record year in terms of the bottom line, thanks to all the group companies and to all our employees. Despite the ongoing integration of BPSO, our colleagues have been able to focus relentlessly on commercial activities.

NII has been resilient in spite of an acceleration of the reduction in interest rates and the progression of net commission income has been extraordinary, thanks to the effort of all our colleagues.

We have transformed ourselves as a key domestic player with an 11% market share from 8% in 2023. In addition, we have achieved a very thorough presence in rich Northern Italy, where we are present with more than 58% of our branches compared to 47% in 2023.

And finally, as you can appreciate on the slide, since April 2024, when the new Board of Directors took over BPER shareholders have benefited from a total shareholder remuneration, which is close to 220% versus 127% for the FTSE Italian Banks Index.

Moreover, our market capitalization stands at more than EUR 24 billion, an important leap from a market capitalization of just EUR 6 billion in April 2024. As such, BPER has been included incrementally in more than 130 market indices, which have benefited the stock in terms of liquidity and purchasing momentum.

Let's now move to our Q4 financials on the next slide. I would like to draw your attention to the continued progression of our dividends generation. As a result of net profit growth between 2021 and 2024 from approximately EUR 480 million to over EUR 1.4 billion, cumulative dividend payments in the same period amounted to over EUR 1.5 billion. And the payout ratio has increased in the same period from 17.8% to 60.6%.

As you can see on the right side of the slide, for financial year 2025, the Board proposed a dividend distribution of almost EUR 1.370 billion, of which EUR 196 million have been paid in terms of interim dividend in November 2025, amounting to a payout ratio of approximately 75%. This follows our target dividend payout ratio following B:Dynamic | Full Value 2027.

Let's turn the slide to BPER's key financial results. I'm extremely pleased about financial year 2025. In the first part of the year, both banks have focused significantly on business growth and their respective strategic plans.

In a similar way, in the second half, despite the ongoing business integration, both banks performed extremely well. These outstanding results have been possible because of the remarkable commercial performance which led to continued and robust commission growth and resilient NII despite the acceleration of decreasing interest rates.

This slide highlights the financials of the new group based on the consolidation of BPSO's second half results. As such, the impact of BPSO on the consolidated financials accounts for only 6 months. Please note that balance sheet items, on the other hand, include the full 12 months consolidation of BPSO. Also please note that as we mentioned in Q3, Alba Leasing has now been excluded from the consolidation.

In order to ease the reading, on the right side of this slide, we have included on the bottom part of each box BPER's like-for-like results. As you can see, total revenues now amount to EUR 6.6 billion and net profit adjusted amounts to EUR 2.1 billion. The cost-to-income ratio stands at 45.7%, underlining the continued focus on cost efficiencies.

Please bear in mind that on a like-for-like basis, the cost/income ratio stands at 47.2% and has improved by 314 basis points in the last 12 months. So a tremendous effort in operational efficiency has been carried out. Furthermore, the cost of risk stands at 24 basis points, while like-for-like, the cost of risk landed at 34 basis points, basically flat in the last 12 months.

The return on tangible equity stood at 20% while the CET1 ratio continues to be very solid at 14.8%. Despite the acquisition of BPSO, business growth and the implementation of the total return swap in 2025, organic capital generation by BPER amounted to EUR 2.3 billion or 340 basis points in the last 12 months. In a similar way, the liquidity profile of the new group is sound with short- and long-term ratios well above regulatory thresholds.

Slide 7. As we mentioned in Q3, please note that the figures reported on the left side of the table concern BPER on a like-for-like basis. We have included two columns with the consolidated financials which embed only 2 quarters of BPSO contribution. It seems to me pretty clear that BPER is reporting a set of record results.

As you can appreciate, in the last 12 months, total revenues were up by over 2.5%, driven by a resilient net interest income and a very strong result in net commissions. The growth path on net commissions have been remarkable and better than planned.

Moreover, the resilient performance of NII, as I will later explain, was supported, particularly by commercial efforts of our network. Our continued focus on operational efficiency ensure costs to come down by 5.1%, both in terms of HR and non-HR costs.

Loan loss provisions stood at EUR 316 million on the back of our continued conservative approach. As a result, BPER's adjusted net profit almost reached EUR 1.8 billion, up by almost 27% in the last 12 months.

Let's move on to Slide #8. As you can see, these outstanding results allowed us to perform better than our guidance for 2025, both on a like-for-like and on a combined basis. In this respect, I can say that we are well ahead of B:Dynamic | Full Value 2027.

As far as 2026 is concerned, we expect BPER to continue this trajectory on a like-for-like basis. Further information on guidance, including BPSO will be given at the business plan update scheduled for the second half once the full integration will be completed.

Let's move to the core part of the presentation. After some 15 months since the launch of B:Dynamic | Full Value 2027, a quick glance at the progress over plan is a must. The plan, I remind you, remains to date stand-alone, and the merger with BPSO is an accelerator of B:Dynamic | Full Value 2027.

Here are some highlights. On Pillar 1, the strong commercial push enabled new lending to increase by 13% in the last 12 months to almost EUR 20 billion. Net commission income growth continues to be very robust, particularly in Wealth Management and Bancassurance. And our customer base continued to grow significantly with over 50,000 net new customers acquired in 2025.

On Pillar 2, the following highlights are important. Digital channels now process 93.8% of the bank transactions with approximately 28% of new customer acquisition and best-in-class completion rates. Digital sales continue to increase, thanks to higher cross-selling and product penetration.

And we consolidated the digital human model and completed the end-to-end digital operating platform for business and corporate, launching Digital Corporate Banking and Smart Banking Business with fully digital SME credit solutions.

As far as Pillar 3 is concerned, our conservative risk approach enables BPER to boast the most conservative asset quality ratios in Italy, while at the same time, we're increasing automated credit approvals for selected retail, small business and SMEs.

And finally, on Pillar 4, on technology, security and AI, the group data center rationalization process and cloud implementation of all multichannel retail applications are fully completed. In this context, CapEx is running according to plan.

Our commitment to ESG-related lending continues to be strong with some EUR 3.9 billion of new ESG lending in the last 12 months. And finally, over 4,000 colleagues have already been involved in BPER's Academy and training paths.

Let's now turn to our financial performance. Despite the overall scenario characterized by an acceleration of the reduction of interest rates and continued geopolitical turmoil, BPER produced a set of remarkable results.

Noteworthy, our total revenues, which increased by 2.5% on a like-for-like basis to over EUR 5.7 billion and almost to EUR 6.6 billion, including BPSO. Core revenues were stable at EUR 5.4 billion, driven by continued strength in net commissions and resilient NII.

In this context, the ratio of net commission income to total revenues rose from 37% to 38% in 2025, proving the high quality of our revenues. As we will see later, I wish to highlight the commercial drive of NII, which increased between Q4 and Q3.

Finally, it is important to underline how our productivity index, measured as net revenues on risk-weighted assets, has continued to improve relentlessly every quarter from 9.5% at the beginning of '24 to 10.1%. This is a remarkable result, and it is among the highest productivity ratios in the industry.

Let's move on to the next slide, which focuses on net interest income. Although net interest income came down by some 3.2% in 2025, I'm extremely pleased about the outcome, given the context of lowering interest rates.

As you can see on the slide, commercial spreads came down from 3.7% to 3.5% in the last 12 months, negatively impacting the NII line item. In the quarter, however, NII was slightly higher by 3.5%, driven by marginally higher commercial spreads from 3.4% to 3.5%. In an opposite direction, but to a lesser extent, lower impact of average loan volume and an important contribution of noncommercial drivers related to asset liability management exercise.

Please note that loan volumes in the quarter actually increased by 2.1%, driven primarily by retail and factoring. In this particular context, commercial actions aimed at increasing the quality of loan volumes have been extremely effective. This had a positive effect on credit risk-weighted assets, which we will illustrate later.

As I mentioned in the slide on progress of our business plan, new lending in the last 12 months increased by 13% to almost EUR 20 billion. Finally, I would like to highlight that our NII sensitivity on a like-for-like basis to 100 basis points movement equal to EUR 176 million in the quarter versus EUR 184 million in the previous quarter.

Now let's move on to the development of net commission income. The trajectory of net commission income has been spectacular. As you can see on the slide, thanks to B:Dynamic | Full Value 2027, the performance of net commission income in each single quarter of 2025 was higher than in each quarter of 2024.

As such, net commission income continued its strong progress up by 5% in 2025. To date, this performance is well above the targets of our plan. The mere fact that net commission income contribution on total revenues increased to 38% in '25 versus 37% in 2024 is a clear indication of the increasing high quality of our revenues.

Our focus on capital-light, high-quality Wealth Management products is proven by an increasing proportion of this versus total commissions at almost 43% of total from 41% 12 months ago. The remarkable performance of Wealth Management fees is underlined by an increase of more than 10% in the last 12 months. Please note that Bancassurance fees in the last quarter are always positively influenced by performance fees, hence the 122% increase quarter-on-quarter.

That said, the most important contributor remains Banking Services Fees, which almost reached EUR 1.1 billion. Although the contribution of this fees is coming down as a percentage of total commissions, we expect this to pick up significantly once BPER and BPSO will be fully integrated.

Let's move to the next slide. As you can appreciate, since the launch of B:Dynamic | Full Value 2027, TFAs, the most important driver of commission income has been growing from approximately EUR 300 billion to almost EUR 330 billion on a like-for-like basis and to over EUR 420 billion with a new group perimeter. This is primarily as a result of BPER being increasingly perceived as a relevant player in Italian asset gathering.

The integration of BPSO will allow us to further strengthen our focus on asset gathering activities and will ensure the exploitation of further commission-related potential. Key drivers in the quarter have been AuCs and AuMs. An important contributor, for example, is Arca Fondi SGR, which reported over EUR 50 billion in total AuMs at year-end versus EUR 45 billion at the end of 2024.

Noteworthy to emphasize the fact that asset growth between AuMs and AuCs amounted to approximately EUR 16.7 billion, of which EUR 3.9 billion related to net inflows and EUR 12.8 billion related to market effects.

In Q4, there has been an important asset rotation from deposits to AuCs mainly due to the issuance of certificates as well as bond and treasury placements. This is important as we are now increasing penetration of liquidity management for both corporate SMEs and private clients.

Finally, it is important to note that at year-end, the loan-to-deposit ratio stood at 76.3%, stable quarter-on-quarter. This will enable us to continue to grow the loan book and to transform client liquidity into AuCs and AuMs.

Let's move on to our performance on the cost side. Before I start commenting on costs, a topic of which I'm very proud of, let me anticipate that integration costs of approximately EUR 300 million are not included in these figures in order to show cost progress on a normalized basis.

I'm extremely satisfied about the cost performance. The enormous effort of the whole bank on operational efficiency is bearing its fruit. Total costs were down by above 5% in 2025, and this has been achieved for both HR and non-HR costs.

Our plan actions continue to reduce the cost/income ratio, which decreased from 50.3% to 47.2% in the last 12 months. Including BPSO, the cost/income ratio would further lower to 45.7%.

On the HR side, at year-end, the total accounts came down to 19,000, 700 less than in 2024. In terms of the combined group, total accounts stood at 22,600 at year-end. In addition, as a result of previous agreements, we are expecting over 220 exits in 2026. And furthermore, we expect mainly in the same year, 800 additional exits aimed at the implementation of a generational change program in the bank.

As a final note, the strong improvements of non-HR costs is the result of our relentless focus on cost efficiencies. As per our plan, we have significantly reduced outsourcing and consultancy costs.

Slide 17. As you can see, the trajectory of the cost of risk is very sound. LLPs came down by 2% in the last 12 months, while the cost of risk stands at 34 basis points, slightly lower versus 2024. Including BPSO, the cost of risk would stand at 24 basis points.

In the quarter, our continued conservative approach translated into an improvement -- improved NPE coverage ratio, which increased from 56.3% to 57.5%. This remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality.

Moreover, our conservative approach is further confirmed as we report in Q4 2025 coverage ratio on performing loans at 60 basis points, mainly driven by an improvement of the rating classes of our credit counterparts. This ratio is among the highest in Italy.

As we already mentioned in Q3, please note that when including BPSO coverage ratio are somewhat lower due to a technical factor. BPSO nonperforming loans are reported only on a net basis. As a result, the total NPE coverage ratio, which decreases from 57.5% to 52.8% in Q4 is driven by this reporting difference.

Also, please note that the total NPE coverage ratio, including BPSO, improved significantly by 280 basis points from 50% to 52.8%. Moving forward, once full integration will have been accomplished, coverage ratios and NPE ratios will be calculated in a homogenous way.

Let's move on to asset quality on the next slide. On asset quality, let me state that Q4 was characterized by some loan disposals of single names. As a result, the gross NPE stocks were lower versus the previous quarter at EUR 2.3 billion, and the gross NPE ratio came down to 2.4% from 2.7%.

In any case, as in previous quarters, the quality of our loan book continues to show a very healthy state with net NPE ratios improving to 1.1%, one of the lowest in the Italian banking system.

As far as the combined banks are concerned, attention should focus on the net NPE ratio, which stands at 1% and not on the gross NPE ratio. The reason is exactly the same as previously explained, which is that BPSO only reports on a net basis.

Having finished with asset quality, let's move on to the development of the bank's risk-weighted assets. As you can see, in Q4 2025, total risk-weighted assets of BPER, including BPSO, decreased to EUR 80.1 billion.

Despite higher volumes, credit risk-weighted assets were down by EUR 3.1 billion, thanks to high-quality lending and the deconsolidation of Alba Leasing. On the other hand, operational risk-weighted assets increased by EUR 900 million due to the annual update of operational risks.

I will now turn to organic capital generation on the next slide. Despite the acquisition of BPSO, the total return swap of the robust -- and the robust business growth, the combined CET1 ratio at year-end stands at a very comfortable 14.8%.

In the last 12 months, BPER continues to generate a very high level of organic capital. Organic capital generation amounted to EUR 2.3 billion or approximately 340 basis points. This result reaffirms BPER position as a highly resilient institution.

Moving on to liquidity, let me point out that at the end of 2025, the bank's liquidity ratio remained high. As of the end of 2025, the LCR increased to 172% from 165% at the end of Q3. In the same period, the NSFR improved to 134% from 132%.

And finally, the loan-to-deposit ratio stood at 76.3%, stable quarter-on-quarter, one of the lowest amongst Italian peers, which will enable us to continue to grow the loan book through increased loan generation and to transform client liquidity into AuCs and AuMs, thanks to our ability to attract customer liquidity.

Turning now to the bond portfolio. Italian government bonds increased to EUR 15.6 billion and accounted for around 52% of total bonds. On a combined basis, including BPSO, Italian government bonds increased to EUR 21.7 billion and accounts to 50.4% of total.

In Q4 2025, the duration increased majorly due to the position of CCTs equal to EUR 4.4 billion that were repriced in mid-October. Please note that the annualized average yield of the financial portfolio was 2.5% in Q4.

And now a brief look at the latest bond issuance. Throughout 2025, as far as main wholesale issuance is concerned, BPER successfully placed the EUR 500 million senior nonpreferred bond and BPSO placed EUR 500 million of covered bonds.

In addition, in November, BPER successfully placed an AT1 perpetual bond for a total amount of EUR 750 million. And finally, on top of our previous upgrades, in Q4 2025, Fitch and Moody's upgraded their long-term ratings on BPER.

Let's move on to the business integration between BPER and BPSO. The integration plan, which involves 23 cross-bank work streams is fully running and will be completed at the end of April of this year. The major event since our last update is the regulatory green light on the merger by the ECB. This result was achieved in advance of our expectations.

For what concern business and operations, we have finalized the product catalog analysis, and we are implementing the identified actions. And finally, the alignment of group policies is well in progress, as well as the implementation of the customer communication plan.

As previously stated, we confirm that we will fully achieve EUR 290 million in synergies by the end of 2027. We also confirm that integration costs amount to EUR 400 million. Of this, 72% were already booked in Q4 '25, the remaining will be booked in 2026.

Slide 26, as you can appreciate on the slide, not much has changed since our Q3 2025 result call. As of today, the next step will be the extraordinary shareholders' meeting of BPER and BPSO in order to approve the merger plan in March 2026.

On Slide 28, we report the divisional financials for BPER on a like-for-like basis. I would like to draw your attention to the important results achieved on total wealth commission income across our divisions, which amounted to EUR 928 million, compared to EUR 840 million in 2024, an increase of above 10%. These results underline the important focus of the group on asset gathering activities.

Let's move to the final remarks. Allow me to say that BPER results have been outstanding. Firstly, we achieved a record net profit on both on a like-for-like basis and on a combined basis. This set of results will translate in a proposed dividend payout ratio for financial year 2025 of 75%, amounting to approximately EUR 1.370 billion, of which EUR 186 million already paid in November 2025.

Secondly, thanks to all our units, our colleagues and customers, we have been able to continue to focus on business growth, execution of B:Dynamic | Full Value 2027 and the regulatory, IT and business integration of business.

The commercial strength of the bank has been remarkable. Reported NII was better than expected despite declining interest rates, while loan volumes have grown with respect to 2024. The trajectory of net commission income has been outstanding, fueled by growth in Wealth Management as BPER is gradually being increasingly recognized by our customer base as a leading Italian asset gatherer.

Cost efficiency has been very thorough on both HR and non-HR. HR costs are very much under control. We are supported by our colleagues and trade unions to enable the bank to enhance a generational change while rendering the bank linear.

On the non-HR front, we have taken decisive actions on outsourcing and consultancy costs, which led to significant savings. In this context of geopolitical headwinds and political turmoil, asset quality remains one of the best in the Italian banking sector, given that we are very selective with respect to whom we lend to.

On the capital side, despite the acquisition of BPSO, business growth and implementation of the total return swap, we maintain a sound capital position with a CET1 ratio of 14.8%. In addition, we boast an outstanding organic capital generation amounting to 340 basis points in the last 12 months.

And finally, we are fully on track to ensure a smooth, efficient and effective integration of the two banks before end April 2026.

We are now ready to take your questions. Thanks.

[Operator Instructions] The first question comes from Lorenzo Giacometti of Intermonte.

Congratulations for the outstanding results. And then coming to my question, I have actually two. So the first one is if you can give us some color about your 2026 expectations in terms of top line, the main top line items and bottom line.

And the second question is about remuneration. So shall we keep in mind your 75% payout ratio? Or shall we expect some surprises within the business plan also considering both your capital position and the derivative contract you entered? Yes, that is all.

Thank you, Lorenzo. So as much as your first question is concerned, let's say that the outstanding results allowed us to perform better than our guidance for 2025, both on a like-for-like and on a combined basis, as I mentioned before. And in this respect, we are, and I can say that we are well ahead of our B:Dynamic | Full Value 2027.

Then in as much as 2026 is concerned, we expect BPER to continue the trajectory on a like-for-like basis and probably on the consolidated. But further information on guidance, including BPSO, will be given once the business plan update will be -- that is scheduled for the second half of the year, will be delivered.

And this because we want first to go through the full integration, complete the full integration, and then we'll be in a better position to do that. But let me reconfirm that we -- I believe, BPER to continue the trajectory that -- as shown in 2025. And as I mentioned, we are well ahead of our plan.

In as much as remuneration is concerned, we are -- we stick to our decision to pay a good dividend to our shareholders. You know that in our plan, in our strategic plan, we indicated 75% in terms of payout ratio.

But I also mentioned in other presentations that if the bank will continue, as I believe, will continue to have such a strong organic capital generation which might also be accelerated by the full integration of BPSO, then we might revise also this payout ratio.

And then here, I have to stop because we are living in difficult times. We have geopolitical situations, macroeconomic situation. So we want to make sure that we produce capital, that we have organic capital generation, and then we'll decide what to do.

The next question is from Matteo Panchetti of Mediobanca.

Yes. I have two questions. One on the derivatives and one on the clarification on PPAs...

Excuse me, sir. Are you able to speak without the headset because we don't hear you very clear?

Okay. Can you hear me better now?

Much better.

Yes. so you have previously stated that you have entered a derivative position based on your confidence in the company growth prospects and delivery. Since your announcement, the stock has been rally more than 20%.

What is your current intention regarding these derivatives? Are you considering partially closing it and taking some profits to roll it and maintain exposure? Any color will be appreciated.

Can you also confirm how much was the contribution of the TRS to the trading line this quarter? And if the sensitivity of plus/minus EUR 200 million for each 10% share price is still valid?

And the last question is on the PPAs. I've seen this quarter you have benefit 5 basis points. I'm correct assuming that you still have EUR 400 million or roughly 40 basis points capital tailwind from this?

So I will take the first question. Thank you, Matteo, for your question. I will take the first one, and then I'll put through Simone Marcucci, our CFO. So in as much as the derivative is concerned, as you know, as we mentioned, when we informed the market about the derivative, the derivative has a 3-year life.

And so we are not thinking neither to expand it, not to close it or whatever. So it will stay the way it is. And therefore, we don't see any variation in the position in terms of -- in as much as our position is concerned vis-a-vis the derivative itself.

I'll put through Simone Marcucci now.

Thank you very much, Mr. Papa. The profit and loss effect of the derivatives in trading, as you mentioned, is EUR 28 million in Q4 2025. it's clearly now at the moment, higher than that amount.

Regarding the PPA, the effect that you have seen, that we have shown in these lines is the total effect. There will be no other effect on the capital for the next quarters.

The next question is from Noemi Peruch of Morgan Stanley.

My first question is on growth and NII. Loan growth was around 2% at BPER and in the mid-single digit for Sondrio, well ahead of the market. So could you please elaborate on both banks' strategy to gain market share? And how do you see volume growth and NII evolving in 2026?

And then I have a second question on distribution. How shall we -- first of all, what's the size of the equity swap right now? And how should we read this vis-a-vis a potential share buyback? And how potentially these two will kind of interact with each other?

Noemi, sorry, can you repeat the second question? Because the line was disturbed. I didn't get it properly.

Yes, absolutely. So my second question is on the equity swap. What's the current size at the minute? And how will this behave vis-a-vis a potential share buyback?

In terms of growth, so we indicated that 2025, we grew both BPER and Sondrio grew and that the two banks are proceeding based on their business plan that was presented for us in October '24 for BPSO in March '25, then it will be the integration in April. 2026, we foresee a growth, we will keep on growing.

If you look at -- if you remember our presentation for the strategic plan, we indicated a growth of 3% CAGR. That is what we are delivering so far. And we believe that we'll be able to keep on growing this in -- to keep on growing on the loan side, both on the Corporate side as well as on the Retail side. So for different products, and we see constant growth there.

In as much as NII is concerned, as I mentioned at the beginning, we see that -- we believe that BPER will continue the trajectory of growth on a like-for-like basis. Just one note, but we already indicated this when we presented the third quarter results.

We are, as of today, based our budget on interest rates at 1.75%. So we have a conservative approach in terms of interest rates. So let's see what ECB will do going forward. But for the time being, we prefer to stay again, conservative rather than staying -- rather than projecting figures that are too aggressive.

In as much as your second question is concerned, I take the second part of the question, and then I'll ask Simone to answer the first part. So buyback, as I mentioned, was the question of Lorenzo, we remain committed to our generous policy with a 75% payout ratio. That might increase in case of confirmation of our capability of generating capital.

In as much as buyback is concerned, any decision will eventually be taken by the Board of Directors. Anyway, let me state that the derivative announced in October is intended to hedge a potential decision for buyback which might be then more convenient in the future. So this is where we stand today. Simone?

Regarding the TRS, we don't disclose the percentage, we disclose the effect. We have the effect in this quarter of around EUR 510 million of deduction in order to arrive to the completion of the TRS described in October. We still miss EUR 200 million of deduction that -- this will plan clearly on the price of the share.

The next question is from Giovanni Razzoli of Deutsche Bank.

So my first question is on the net interest income outlook for the short term. I've seen that you have a very strong growth of the volumes in this quarter but the growth of the NII was mainly related to the financial component.

So my understanding is that the growth of the stock has not yet translated into higher NII. So I was wondering whether my understanding is correct so that we can anticipate for the coming quarters still confirmation or even better run rate of the NII when compared with Q4.

And another question is on the CET1 ratio. In 2026, you plan to complete the merger with Popolare di Sondrio. If you can share with us what could be the CET1 ratio on a like-for-like basis. So if we were to assume the completion at year-end of the merger with Sondrio, what would be the 14.8% look like?

And the last question is on the asset quality, is more a broader top-down question. I've seen yesterday Credit Agricole for the first time mentioning some prudent messages in terms of acceleration of defaults in SMEs.

I was wondering what are you seeing on the ground right now. You have a very strong coverage ratios. So you have overlays, so it's not a matter of cost of risk, but was more interesting to the trend evolution for 2026 in terms of potential risk from this segment.

Thank you, Giovanni, for your questions. So in as much as CET1 ratio is concerned after the integration of BPSO, we confirm that we'll be above 14.5%. So we need to go through the full integration, but the confirmation is that we'll be above 14.5%.

In terms of NII, and then I will put through also Simone. In reality, we had an increase, given -- I mean if you look at NII, we have on Commercial rates on Page 13 of the presentation, EUR 10 billion increase for rates, then we had on average volumes went down a little bit, and the noncommercial, as you mentioned, is the major component on the growth.

You are right in saying that we are also repricing because we are conducting also a repricing exercise of the loans. And we believe that in the next months, we will see an improvement in the NII driven by both volume side and -- on one side and the repricing exercise that we are making on the other side.

Yes. Thank you very much, Mr. Papa. Regarding the net interest income and not commercial components, as you can see, we have described in the presentation that our Head of Finance take the opportunity to decrease the cost of funding and we have repaid an instrument Tier 2, and this was a one-off effect that we have described in the presentation.

There were other effect on the liability side and also on the bond portfolio you see that we have taken the moment and in the last quarter, we have slightly increased the bond portfolio, and this is also the effect that is shown in the noncommercial side of net interest income.

And in as much as asset quality is concerned, I don't see deterioration actually, but I'll pass the stage to Valerio Rodilossi that is a colleague of the CRO area. Please, Valerio.

Thank you for the question. I can confirm that we don't see a structural deterioration of the credit portfolio. The default rate for 2025 is in area of 1%. So comparable with the previous year. And also for the different asset classes, there are no differences with previous year. Our lending policies are very conservative. We are concentrated on the best rating classes. So at the moment, we don't envisage any deterioration of the credit portfolio.

The next question is from Andrea Lisi of Equita.

The first one is kind of a broad one related to the integration of Popolare di Sondrio, in particular. In relation if you can share with us some color on how the clientele of Sondrio is answering to the acquisition after 6 months from the completion of the acquisition as well as if you have observed some elements that are a bit more tougher than what we would have initially expected or others that are going better?

Then the other question is on fee. In particular, I want to ask you as regards BPER standalone, if you can indicate us why banking and Bancassurance fees are slightly down year-on-year in the last quarter and which trend should we expect going on?

Thank you, Andrea, for your questions. So in as much as the first question is concerned, I think the integration is proceeding very well. As I mentioned, we have 23 work streams that are taking care of covering all the different aspects of the integration. I would say that in answer to your question could come also by the very good results of BPSO.

You saw that BPSO posted a very good net profit. And if you consider that the operation, the acquisition of BPSO was concluded in July. So you have basically 5 months in which the customers of BPSO have reacted very positively to the acquisition, to the fact that BPSO is now part of a larger group.

And we believe that this will be reflected also in 2026. We have analyzed the different aspect of the integration. We don't have much overlapping. And we do see a possible growth also on those customers that are common with BPSO.

In as much as fees is concerned, so banking services, the fees, the banking services commission are down in terms -- if I understood correctly your question, are down in terms of percentage because we are growing very much on the wealth management Bancassurance fees.

But we have a growth that is year-on-year of 0.6%. And this on the back of the fact that we are growing the number of customers. So we are talking about 50,000 net new customers in 2025 and the fact that we are also shifting -- we have been shifting in the last couple of years our activity on the corporate side, and we have become, in more situations, a bank of reference rather than the pure relationship bank.

And therefore, we see more commercial activity coming also from corporate customers. In as much as Bancassurance is concerned, year-on-year, we have a slight decrease. But in reality, financial year on financial year, you see we grew by 7.5%, which is, I think, is a healthy growth. And because we go from EUR 128 million to EUR 138 million financial year on financial year.

And therefore, I see also here if we look also the volumes of our Bancassurance products that have been sold in 2025, we are on a very good trajectory in terms of growth there. So it might depend also on the fact that in certain cases, we are selling products where we have fees that are paid not upfront but are paid on different tiers. And therefore, you might see this as a difference. But in reality, we have a growth in terms of volumes.

The next question is from Adele Palama of UBS.

Yes. Couple of questions from me. So the first one is on the NII. Just a clarification. Can you tell us the impact in the quarter of the Ecobonus, maybe in the quarter, also in the full year. And how do we need to think about this impact going forward?

Then the second question is on cost evolution. So looking only at BPER standalone, so you had like quite an impressive reduction. I want to understand how sustainable is this reduction like going forward? And then if there is any consideration around the cost synergies that you're expecting from Sondrio, if there is room for higher cost synergies than what has been announced previously?

And then the last one, sorry, is on the capital. So I just want to double check that there is no other moving parts left in the capital in terms of regulatory headwinds, or I mean, probably there is only the last part of the restructuring costs, but you are basically taking everything related to the Sondrio acquisition. So from now on, we should just expect organic growth of the capital and if there is any impact from RWA optimization left?

Thank you, Adele. So I take the question on cost. So we, I think, have performed a fantastic job on the cost reduction. We started in 2024. You might remember that a couple of years ago, 2, 3 years ago, we were at around 62%. If I take BPER stand-alone, we are at 47.2%; on combined basis, around 45%.

We keep on working very much on cost reduction. In terms of HR costs, as I mentioned, we do expect to have a further reduction because we have more than 200 FTEs that will -- head count that will leave the bank based on previous agreement with the unions.

And as you know, we reached an agreement in December for the exit of an additional 800 accounts based on this new agreement, and most of this will be exiting the bank by year-end. Now we are collecting the request coming from the colleagues that want to leave the bank and we are talking about retirement or preretirement schemes.

In as much as non-HR cost is concerned, based also on our B:Dynamic plan, we keep on reorganizing ourselves, bringing back activities that we had outsourced as we had done in 2025. And therefore, we will keep on, I believe, reducing also non-HR costs in order to further improve our position in this case.

But, if I look at the combined basis, today, we are already at 45%. And considering that we are a bank only based in Italy basically and not having subsidiaries in Eastern Europe or other countries where the cost are lower than in Italy, I think that we have already reached quite a good percentage in terms of cost/income.

Now I put through Simone for the other two questions.

Yes, sorry. Regarding the Ecobonus, we have the EUR 260 million in 2025. More or less EUR 270 million, EUR 224 million in the quarter was more or less constant. Clearly, in the next years, the Ecobonus will tend to decrease a little bit more in '26 and more then in '27 and clearly '28.

Regarding the component of CET1 ratio for the next year, we clearly, we will have the benefit from the merger of Popolare di Sondrio. We will have the effect of the TRS that I mentioned before, EUR 200 million, then we will have the positive effect clearly of the deal of Nexi. And then we will have the usual operative risk at the end of the year for around 20 bps. This is what we see at the moment. We don't see other particular effects that you mentioned.

The next question is from Luis Manuel Grillo Pratas of Autonomous.

My first question is on the PPA information on Slide 33. So essentially, you mentioned that post tax fair value adjustments were slightly above EUR 700 million. I was wondering what is the expected P&L effect from the reversal of these fair value adjustments in the coming years, how much shall we expect per year and how many years this will be a negative in the P&L?

And then on the tax rate, if you could please provide the guidance on the tax rate in 2026, considering the increase on the IRAP part of the budget law. And then just a small clarification. How much of Bancassurance performance fees did you book in Q4?

Yes. Thank you very much for your question. I'll start from the last one. Bancassurance one-off, the usual one-off is EUR 27 million, at the level of last year, more or less. Regarding the PPA, Page 33, we will have an effect of around 2 mid-digit, still clarifying, but it should be 2 mid-digit negative per year for the next years.

And then tax rate guidance, you know that -- you see that we have now 31%, this is our correct tax rate for the year. Clearly, 25% in the fourth quarter, but is -- or let me say, a one-off, an adjustment, but 31% is correct one. For the next year, you have to take in account there is 2% IRAP, so around 33%, 34% is the guidance.

Just a quick follow-up. Like when you say 2 mid effect, do you mean like EUR 200 million per year?

No. Two mid-digit. Two-digit, not EUR 200 million.

Around EUR 50 million?

We are still look at something more, but two-digit, not EUR 200 million.

The next question is from Ignacio Ulargui of BNP Paribas.

I have three questions, if I may. I mean the first one is on NII on the noncommercial part on the wholesale funding. How should we think about that in terms of your rating is improving the issuance that you need to refinance into 2026, how that should be supportive into NII, if there is any tailwind from there in 2026?

Linked to that, just a clarification on the EUR 22 million of the quarter. You see it as a one-off, so it will come back down into the coming quarters? Or it's kind of a jump because of the lower funding or lower cost of the Tier 2?

The second question is on deposit growth. How do you see the deposits growing into 2026? And how should we think as a trade-off between leaving that deposits in terms of liquidity financing lending versus in reinvesting in AuC or AuM, given that profitability probably is better in the former in keeping that on balance sheet?

The third question is, if I just look to the cost growth and the cost targets, I think, Mr. Papa, you said that you don't see much more scope for a decline in the cost to income. But if I just see your revenues should grow ahead of cost. So intuitively, your cost to income should keep on improving as you keep on accelerating commercial activity. What do I am missing there?

Thank you, Ignacio. I take the last two questions, and then I'll ask Simone to answer the first two. Deposit growth. But in reality, if you look at our presentation on Page 15, you see that quarter after quarter, we have been growing the deposits BPER stand-alone. And obviously, with the integration, the full integration of Sondrio, we see a progression also under this point of view.

There is a lot of attention. We pay a lot of attention to liquidity. All the teams, all the commercial colleagues are very much pushing on gathering liquidity from customers, both retail and corporate, because -- and this is of paramount importance for us.

We have been concentrating on that in the last couple of years, and we will keep on going like that. Why? Because this will allow us to transform liquidity into Asset under Management or Asset under Custody, which is what we have been doing in the last couple of years.

And at the same time also to grow on the loan side without -- always keeping a loan-to-deposit ratio that, as you see, is stable at around 76%, which give us ample room to in case accelerate even further the growth both on asset management as well as loan growth. So -- but we want to stay at this level of loan-to-deposit ratio in order to make sure that we have always a reserve or liquidity to further push for business.

In terms of cost target, I didn't say that we are not going to lower the cost. In fact, on the HR cost, I believe that this will be lowering for the simple reason that we have, as I mentioned, and we know we have over 200 people that will be exiting the bank, BPER stand-alone, based on previous agreement with the unions. BPSO never had any agreement with the unions.

Then in December, we signed a new agreement with the unions for the exiting of an additional 800 colleagues. Let's see what is the number we are going to reach. We are in progress now, as I said, of collecting the request from the colleagues. And most of these colleagues will be leaving the bank, the new group by year-end.

You know that -- you know also that in the agreement with the unions, we will hire one new colleague for every two colleagues that are exiting the bank. So the net-net will be minus 400 because -- but this will be done across the years, not this year, not only next year.

And then we keep on monitoring and pushing very much also on non-HR cost. One of the activities that allow us to reduce the non-HR cost has been the reinsourcing of activities that were outsourced in the past years. This has been done in 2025. We keep on doing this.

So we see also further reduction on non-HR cost on, as I said, reinsourcing of activities as well as reduction of costs related to consultancy and so on. So hopefully, we'll be able to further lower the cost/income ratio.

What I mentioned before is that I believe that the 45-ish is already quite good, considering that, as I said, the bank is based in Italy, doesn't have subsidiaries in countries with much lower cost of both HR costs and non-HR cost.

But there is a relentless activity to reduce cost driven also, obviously, by the fact that we will be pushing on the revenue side, and we see a progression also on the revenue side.

Thank you so much for the question. Regarding the EUR 22.8 million on Page 13, as we have stated in the page on the top right, 11 -- EUR 13 million is a one-off. So of the remaining EUR 10 million, we cannot say that each quarter will have a EUR 10 million on the -- positive on the noncommercial. But as you mentioned, for sure, we will have a benefit on cost of funding coming mainly from the positive effect of the merger of the two banks.

The next question is from Juan Pablo Lopez Cobo of Santander.

I got a follow-up on OpEx regarding the 800 exits that you mentioned. Could you clarify if this is already included, let's say, in the BPSO synergies, or this will be on top of? And also the savings in euros that we could expect from this 800 that you mentioned, it's going to be 400 net?

And my second question is related to capital. If I look to your presentation in Slide 19, you mentioned positive impacts coming on risk-weighted assets from the active portfolio management, around EUR 600 million, and also models around EUR 400 million. If you could provide a bit more color regarding this, it will be useful.

And also, if you are planning to execute any SRTs. We have seen other banks in Europe quite active in Italy as well. We know that your capital position is very strong, so there is no need for that. But still, given the relatively cost of capital of SRTs, I was wondering if you are planning to do something.

Thank you, Pablo, for your questions. So in as much as OpEx is concerned, the 800 exit are already included in the synergies, cost synergies that we've been indicated as synergies coming from the integration of BPSO. We -- as you know, we indicated EUR 190 million, of which around 40% to 45% come from the HR costs.

So we will see a reduction. Obviously, you will see this impact in 2027, because as I mentioned, most of these colleagues will be exiting by year-end. But when I say by year-end, it means year-end, so not across the year.

In as much as the 400 hirings that we are going to perform, this will not happen in neither this year nor next year, will happen in the year to come. So we will have an increase coming from that. Nevertheless, you have to consider the fact that whoever exit has a much higher cost than whoever comes in.

Because we are hiring younger people out of university for this generational change that you want to bring also to the bank. And therefore, there will be eventually an increasing cost, but it will happen throughout a few years. In as much as the asset -- the risk-weighted assets, I'll let the colleague to answer.

Yes. Thank you for the question. With regard to the RWA dynamic in the quarter, under the label of active portfolio management, we observed a reduction of corporate and financial bond securities with a positive impact on the RWA.

And on regulatory models in October, we received an authorization by ECB to extend our internal model to some corporate portfolios previously not covered by internal model and treated under standardized approach, for example, the exposure inherited by Carige. And also this positive impact, and then we had the business dynamic due to the increase of the volumes.

Regarding the SRT, it was one of the pillar of our plan. We have created the structure. We are ready in any moment. When we will need, we will execute it. For the time being, nothing planned.

The next question is a follow-up from Giovanni Razzoli of Deutsche Bank.

Yes. Just a follow-up to one of Simone' answers about the moving part on the CET1 in 2026. You mentioned that you're going to have EUR 200 million from the TRS next year. And you also mentioned the agreement with Nexi.

So I'm not -- it's not clear to me whether this is going to be an impact in 2026 or not because I've seen that in Slide 33 that you have already booked EUR 100 million as a merchant acquiring impact in the PPA. So I was wondering whether there is something else or what was you referring to in this answer?

Yes. Thank you very much for your question. As you correctly mentioned, on Page 33, this is the PPA accounting, not the CET1 effect. We have EUR 105 million of merchant acquiring that is Nexi. This has been taken account during the PPA, but we still don't have the effect in the CET1, and this will happen in 2026 when the deal will be finalized.

[Operator Instructions] Gentlemen, at this time, there are no questions registered.

Okay. Thank you very much to all. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Third Quarter 2025 BPER Consolidated Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Nicola Sponghi, Head of Investor Relations of BPER. Please go ahead, sir.

Thank you, and good morning, everyone. I'm pleased to welcome you to our third quarter and first 9 months 2025 earnings conference call. Before I give the floor to our CEO, Gianni Franco Papa, please be reminded that our slides set and press release can be found on our corporate website.

I would also advise you to take note of the disclaimer on Slide 2 of the presentation document. That said, after the presentation, our CFO, Simone Marcucci; and our CRO, Emanuele Cristini, will take care of the Q&A session. I will reiterate that this is reserved for financial analysts whom I will kindly request to ask a maximum of 2 questions each. So that everyone will have the opportunity to contribute to today's call. Thank you very much.

I will now leave the stage to Mr. Papa, CEO of BPER.

Thank you, Nicola. Good morning to everyone, and welcome to our Q3 earnings presentation. Before giving you details on the financial performance of BPER, I would highlight a number of key features of the third quarter 2025. First and foremost, the 23 work streams identified for the integration of BPSO into BPER are all up and running and will be completed by the end of the first half of 2026.

Secondly, in the context of our new organizational model, we have decided to regroup 90 overlapping branches in the central and northern part of Italy. And given our market share by branches in Lombardy, where we can almost boast a share of the market of 18%, we decided to create a new regional headquarter called Lombardia North. As far as our human capital is concerned, we are aiming to further invest in young talent.

In order to accomplish a generational change in the bank, we have initiated discussions with trade unions to implement additional voluntary exit, which should amount to about 800 employees. As you have seen in our press release dated October 21, BPER signed a derivative contract, which can be summarized as a synthetic exposure to its own shares of up to 9.99% of the share capital.

We decided to take this action as we strongly believe in the enormous potential to shareholder value generation of the new banking group, combining BPER and BPSO. On the rating side, we have received important recognitions from the credit rating agencies with improved ratings post the successful outcome of the business combination with BPSO.

And finally, as you can appreciate on the slide, in the last 24 months, BPER shareholders have benefited from a total shareholder remuneration, which is shy of 280%. This would increase to 315% at the end of October when the market cap reached EUR 20.2 billion. The trajectory is similar if we look at the main tangible banking asset drivers, which have increased by almost 50% in the same period.

And let me add that compared to our peers, I'm convinced that we continue to trade at a discount. Let's now move to our Q3 financials on the next slide. I'm very pleased about Q3 because along with the ongoing business integration, both banks performed extremely well. These outstanding results have been possible because of the remarkable commercial performance, which led to continued and robust commission growth, resilient NII and an increase in the number of net new customers.

This particular slide highlights the financials of the new group based on the consolidation of BPSO Q3 results. As such, the impact of BPSO on the consolidated financials accounts for only 3 months. And in a similar way, Q4 will include only 6 months of BPSO results. Please note that balance sheet items, on the other hand, include the full 9 months consolidation of BPSO. In order to ease the reading on the right side of the slide, we have included on the bottom part of each box, BPER like-for-like results.

As you can see, total revenues now amounts to EUR 4.6 billion and net profit amount to EUR 1.5 billion. On a like-for-like basis, these are the best ever 9 months results by BPER with a net profit of EUR 1.3 billion, an increase of almost 20% 9 months on 9 months. The cost/income ratio stands at 46%. BPER on a like-for-like basis decreased cost-income ratio by over 270 basis points to 46.8%, underlining the continued focus on cost efficiencies.

The cost of risk stands at 24 basis points, while like-for-like, the cost of risk landed at 35 basis points, lower by 5 basis points 9 months on 9 months. The return on tangible equity stood at 19.8%. If we would operate with a CET1 ratio of 13%, our return on tangible equity would surge to 21.6%. The CET ratio continues to be very solid at 15.1% or 15.7% following the deconsolidation of Alba leasing in Q4.

Organic capital generation by BPER like-for-like amounted to EUR 1.7 billion or 272 basis points in the last 9 months. In a similar way, the liquidity profile of the new group is sound with short- and long-term ratios well above regulatory thresholds. Before we start, please note that the figures reported on the left side of the table concern BPER on a like-for-like basis.

For ease of reading, we have included 2 columns with the consolidated financials, which embed only 1 quarter of BPSO contribution. As already mentioned, BPER is reporting a set of outstanding results 9 months on 9 months. As you can appreciate, total revenues were up by over 2%, 9 months on 9 months, driven by resilient net interest income and a very robust result in net commissions.

Please bear in mind that Q3 is normally a lackluster quarter in terms of commissions given the summer holiday period. Moreover, the resilient performance of NII, as I will later explain, was supported particularly by commercial efforts of our network, which translated into an increase in new loan origination. Our continued focus on operational efficiency ensured cost to come down by 3.5%, 9 months on 9 months and 2.4% quarter-on-quarter.

Loan loss provisions stood at EUR 230 million, 9 months on 9 months. In the quarter, reported LLPs stood at EUR 88 million, increasing by almost 22% quarter-on-quarter on the back of our continued conservative approach. As a result, BPE stated net profit exceeded EUR 1.3 billion, up by almost 20% 9 months on 9 months. As you can see, given these outstanding results, we maintain our guidance unchanged.

Please take note that the left part of the slide is related to BPER on a like-for-like basis, while the table on the right side is related to the consolidated financials, which includes the 6 months contribution to the 2025 group accounts. This is the first time we provide 2025 guidance on consolidated figures, including BPSO.

There is an exogenous factor which needs to be taken into account that it is related to the new banking levies in Italy. The topic is being discussed at banking system level with the auditors to understand whether the impact will start from 2026 or 2025. On a conservative basis, we have taken into account the impact of the so-called extraordinary tax on the increase in interest margin, which relates to the redemption of the nondistributable reserve created in 2023 and which amounts to approximately EUR 116 million or 14 basis points on the CET1 ratio.

It is yet unknown if the impact will pass through the P&L. One last note is related to the combined cost/income ratio for the end of the year, which will land at below 48%. Guidance is adjusted for approximately EUR 300 million of integration costs related to the merger. Let's move to the core part of the presentation. After some 12 months since the launch of B:Dynamic Full Value 2027, a quick glance at the progress of our plan is a must.

The plan, which I remind you, remains to date stand-alone, must be read in the context of the additional 23 work streams launched for the integration. As I mentioned several times, the merger with BPSO is an accelerator of B:Dynamic Full Value 2027. Some highlights. On Pillar 1, the strong commercial push enabled new lending to increase by 20% 9 months or 9 months to almost EUR 15 billion, close to EUR 20 billion, including BPSO.

Commission income growth continues to be very robust, particularly in Wealth Management, and our customer base continued to grow significantly. On Pillar 2, currently, 26% of new customers become BPER's clients via digital channels. And similarly, BPER has been awarded a leading position among the digital leaders in Italian banking.

As far as Pillar 3 is concerned, our conservative risk approach enables BPER to boast the most conservative asset quality ratios in Italy. And finally, on Pillar 4, on technology, security and AI, the group data center rationalization process is fully completed with the adoption of AWS cloud services, ensuring data protection and business continuity while improving the digital customer experience. In this context, CapEx is running according to plan.

Our commitment to ESG-related lending continues to be strong with some EUR 2.7 billion of new ESG lending in the 9 months. And finally, over 3,700 colleagues have already been involved in BPER's academy and training path. Let's now turn to our financial performance. Despite the overall scenario characterized by an acceleration of the reduction of interest rates and the summer months, BPER produced very positive results on a like-for-like basis.

As such, total revenues increased by 2% 9 months on 9 months, and these are extremely satisfying results. Core revenues, 9 months or 9 months were stable at EUR 4 billion, driven by continued strength in commission growth, thanks to AUM, life insurance and bancassurance products. In this context, the ratio of net commission income to total revenues rose from 36.4% in the 9 months 2024 to 37.8% in the 9 months 2025, proving the high quality of our revenues.

As you will see later, I wish to highlight the commercial driver on NII, where the negative impact of decreasing interest rates was compensated to some extent by the commercial push of the bank in terms of loan origination. In the quarter, lower NII was compensated by a strong performance in commissions, whereas dividends and other income were particularly affected by dividend seasonality and lower trading activities, which is customary in Q3.

As you can appreciate, our productivity index measured as net revenues on risk-weighted assets has improved year-on-year to 9.8%. Let's move on to the next slide, which focuses on net interest income. Although net interest income came down by some 3.6% 9 months or 9 months, the reduction in NII, principally driven by lowering interest rates was better than expected.

As you can appreciate on the slide, commercial spreads came down from 3.7% to 3.4% in the last 12 months, negatively impacting the NII line item. In the quarter, NII was basically stable, down by less than 1% and was driven by the interest rate environment, which clearly had a negative impact on NII. Lower interest rates had an important effect on commercial spreads.

And in an opposite direction, but to a lesser extent, the important commercial effort of the bank had a positive effect on new loan origination. In this particular context, commercial actions aimed at increasing the quality of loan volumes have been extremely effective. This had a positive effect on credit risk-weighted assets, which we will illustrate later. As I mentioned in the slide on progress of our business plan, new lending in 9 months increased by 20% to almost EUR 15 billion.

Finally, I would like to highlight that our NII sensitivity to 100 basis points movements equal to EUR 184 million in the quarter versus EUR 150 million in the previous quarter. The increase in sensitivity is related to seasonal repricing of floating rate assets. The increase of approximately EUR 30 million in the quarter is in line with the increase between Q2 and Q3 2024.

Now let's move on to the development of net commission income. Commission income continued its strong progress, up by 6% 9 months on 9 months and 8.4% year-on-year. It is noteworthy to underline that net commission income contribution on total revenues increased to 37.8% in the 9 months 2025 versus 37.3% in first half '25 and 36.4% in the 9 months 2024.

This is a clear indication of the increasing high quality of our revenues. The bank relentlessly focuses on capital-light, high-quality wealth management products. This accounts for over 43% of total commissions from 41.5% 12 months ago. All this was achieved despite the summer season, which is a remarkable result. In fact, contrary to 2024, net commission in Q3 were higher than in Q2.

That said, the most important contributor, which represents more than 50% of commissions remain banking services fees, which reached EUR 820 million. This increased by 6% 9 months on 9 months. The fact that BPER is gradually being perceived as a go-to bank by its customer from a purely relationship bank allows the bank to capture a higher share of wallet and increasing net new customers.

As I already mentioned, normally, Q3 is a weaker quarter in terms of commission generation, so we do expect a pickup of fees in Q4 versus Q3. Let's move to the next slide. Total financial assets, the most important driver of commission income grew by 5.3% since the launch of our plan, reaching EUR 320 billion. On top of the market-driven effect, TFAs are growing significantly because BPER is being increasingly perceived as a relevant player in Italian asset gathering.

In this context, the contribution of BPSO increased TFAs by almost EUR 100 billion to almost EUR 415 billion. This will allow us to further strengthen our focus on asset gathering activities and will ensure the exploitation of further commission-related potential. Key drivers in the quarter have been AUCs and AUMs. Although deposits have been flat, there has been an important asset rotation from deposits to AUCs, mainly due to the issuance of certificates.

This is important as we are now increasing penetration of liquidity management for both corporate, SMEs and private clients. In fact, in Q3 2025, the loan-to-deposit ratio stood at 76%, stable quarter-on-quarter, one of the lowest amongst Italian peers, which will enable us to continue to grow the loan book and to transform client liquidity into AUCs and AUMs.

Let's move on to our performance on the cost side. Total costs were down by 3.5% 9 months on 9 months, underlying our relentless focus on operational efficiency. Our planned actions continue to reduce the cost/income ratio, which decreased to 46.8% from 49.5% 1 year ago. Non-HR costs were slightly lower, below EUR 250 million, in line with the previous quarter.

As you can appreciate, the waterfall chart reports the key drivers of HR costs in the quarter. The reduction was mainly driven by organic turnover, which more than compensated the increase related to the national collective labor agreement. At the end of September, headcount stood at 19,144, a reduction of some 1,100 compared to September 2024 related to actions which are already in place.

In terms of the combined group, the integration of BPSO will increase the headcount to approximately 22,900. This will decrease by some 260 in Q4 once Alba Leasing will have been deconsolidated. Before we move to cost of risk, let me anticipate that costs in Q4 will incorporate approximately EUR 300 million of integration costs as we previously indicated when we illustrated the BPER BPSO business combination.

Let's move to the next slide. In a similar way to costs, the trajectory on the cost of risk 9 months or 9 months is decreasing from 39 basis points to 34 basis points, including BPSO. The cost of risk would stand at 24 basis points. The increase in Q3 to 38 basis points is related to our continued conservative approach totally devoted to increasing coverage and translated into an improved NPE coverage ratio, which increased to 56.3%.

This remains one of the highest among Italian peers and will act as a further buffer against any potential deterioration in asset quality. Our conservative approach is further confirmed as we report a Q3 2025 coverage ratio on performing loans stable at 0.63%, among the highest in Italy. In this particular context, total cumulative overlays in the 9 months amounted to EUR 146.6 million after a reallocation of EUR 67.2 million between provisioning categories, keeping stable the performing coverage ratio at 0.63%.

When including BPSO, coverage ratio are somewhat lower due to a technical factor. BPSO nonperforming loans are reported only on a net basis. As a result, the total NPE coverage ratio, which decreases from 56.3% to 50% in Q3 is driven partly by this reporting difference. On a comparable basis, the consolidated NPE coverage ratio would stand at 58% instead of 50%.

Moving forward, once full integration will have been accomplished, coverage ratio and NPE ratios will be calculated in a homogeneous way. Let's move on to asset quality on the next slide. On asset quality, let me state that Q3 was characterized by lower loan disposals. This is important as there was literally no positive effect on stocks from such divestiture activities.

As in previous years, we expect NPE disposals will pick up in Q4. As a result, the gross NPE stock was minimally higher than in Q2, but flat year-on-year and the gross NPE ratio was slightly higher at 2.7%, although improved year-on-year. In any case, as in previous quarters, the quality of our loan book continues to show a very healthy state with net NPE ratios almost flat at 1.2%, one of the lowest in the Italian banking system.

As far as the combined banks are concerned, attention should focus on the net NPE ratio, which stands at 1.2% in Q3 and not on the gross NPE ratio. The reason is exactly the same as previously explained, which is that BPSO only reports on a net basis. Having finished with asset quality, let's move on to the development of the bank's risk-weighted assets.

As you can see, in Q3 '25, total risk-weighted assets decreased from EUR 55.6 billion to EUR 54.6 billion, partly because of almost flat loan volumes and thanks to higher quality lending. As such, credit risk-weighted assets came down by EUR 0.9 billion. While in Q1 2025, operational risk-weighted assets were impacted by EUR 1.5 billion due to Basel IV, we do not expect any material impact related to operational risk due to the annual update in Q4.

On a final note, the combination with BPSO would lead to a total risk-weighted asset of just over EUR 82 billion. I will now turn to organic capital generation on the next slide. In the last quarter, we mentioned that we approached the merger with BPSO in a very robust position as our CET1 ratio stood at over 16%. The combined CET1 ratio at the end of September stands at a very comfortable 15.1% or 15.7% following Alba Leasing deconsolidation.

BPER on a like-for-like basis, continues to generate a very high level of organic capital with approximately 272 basis points or EUR 1.7 billion in the last 9 months. This result reaffirms BPER position as a highly resilient institution. Moving on to liquidity. Let me point out that at the end of September 2025, the bank's liquidity ratios remain high. The LCR is equal to 165% at the end of September '25, in line with the 163% reported at the end of June.

With the deconsolidation of Alba Leasing, the group LCR would stand at 173%. The NSFR is equal to 132%, stable compared to the end of June '25 or 135%, including the deconsolidation of Alba Leasing. As in Q2 -- in Q3 '25, the loan-to-deposit ratio stood at 76%, stable quarter-on-quarter, one of the lowest amongst Italian peers, which will enable us to continue to grow the loan book through increased loan origination and to transform client liquidity into AUCs and AUMs, thanks to our ability to attract customer liquidity.

Turning now to the bond portfolio. Italian government bonds were flat at EUR 14.8 billion and accounted for around 49.8% of total bonds. In Q3 '25, the duration decreased majority due to the position of CCTs equal to EUR 4.4 billion that were repriced in mid-October. Now a brief look at our latest bond issuance. In the first 9 months of '25, as far as main wholesale issuance is concerned, BPER successfully placed a EUR 500 million senior non-preferred bonds with BPSO placed -- while BPSO placed EUR 500 million of covered bonds.

On top of all the previous upgrades, in October, DBRS upgraded BPER long-term deposits from BBB high to A low. Moreover, all credit rating agencies have positively viewed the BPSO business combination and as a result, have also increased the credit rating of BPSO itself.

Following the successful completion of the voluntary exchange offer for BPSO in July, we have launched a joint project between BPER and BPSO aimed at IT and organizational integration as well as the corporate merger to be completed approximately -- by approximately mid-April 2026. Specifically, the projects involves 23 cross-bank work streams, which are all up and running.

To ensure the IT and organizational migration in line with the time line, we launched discovery sessions in August to identify relevant functional and IT gaps between the 2 banks, which will be addressed and implemented through the integration. Additionally, we have defined an IT migration plan, which foresees technical migration tests and simulations in Q1 2026.

In parallel, we have initiated the step leading to the merger between BPER and BPSO. On November 5, the merger plan was presented to the Board of Directors of both banks, including target organizational model, share exchange ratio and IT integration plan. Thereafter, the request to DCB for the merger authorization will be submitted.

Finally, we believe that the merger between BPER and BPSO will be carried out effectively, enhancing the strength and resources of BPSO and resulting in a bank that will be even better positioned to achieve the strategic and business objectives of both entities. As previously stated, we confirm that we fully -- we will fully achieve EUR 290 million in synergies in 2027.

We also confirm that integration costs amount to EUR 400 million. Of this, 75% will be booked in Q4 '25, the remaining in 2026. Now let's turn to timing and next steps. As of today, the next key regulatory step will be the extraordinary shareholders' meeting of BPER and BPSO in order to approve the merger plan in March 2026.

From an operational and business point of view, we expect the IT migration and the launch of the revised organization and distribution model to be finalized by approximately mid-April 2026. On Slide 28, we report the divisional financials for BPER on a like-for-like basis. I would like to draw your attention to the important results achieved on total wealth commission income across our divisions, which amounted to EUR 689 million in the first 9 months compared to EUR 840 million achieved during the entire 12 months of 2024.

These results underline the important focus of the group on asset gathering activities. Let's move to the final remarks. In conclusion, in this important quarter, the group has been focusing on business growth, execution of B:Dynamic F Value 2027 and the regulatory, IT and business integration of BPSO. As we previously stated, the acquisition of BPSO must be seen as an acceleration of our plan.

The commercial strength of the bank has been remarkable despite the summer holidays. Net commissions continue to grow at an important pace with wealth management playing an ever-increasing role. Reported NII was better than expected despite declining interest rates. In this context of geopolitical headwinds, asset quality remains one of the best in the Italian banking sector.

Let me underline that the bank has been able to generate an important profitability, coupled with an outstanding organic capital generation amounting to 272 basis points in the last 9 months. As such, we are confident in the potential for further superior value creation. The recent derivative transaction of 9.99% of share capital needs to be viewed as a proof of management's confidence in the enormous potential for shareholder value generation of the new banking group, combining BPER and BPSO.

And finally, we are fully on track to ensure a smooth, efficient and effective integration of the 2 banks by approximately mid-April 2026. We are now ready to take your questions.

[Operator Instructions] First question is from Marco Nicolai, Jefferies.

First question on capital. Can you explain all the moving parts in your above 14.5% common equity Tier 1 target for December? During the call, you mentioned 14 bps negative from the extraordinary profit tax. Is this all for this item? Or do you expect to have more, say, in the coming years if you pay dividends out of that reserve? Then another question on this EUR 300 million integration cost, is it pre or post tax?

Do you include also the 60 bps positive from Alba Leasing in the consolidation? So do you have also the 60 basis in your December targets? And what is the impact of the total return swap transaction? So this is -- and is there anything else I've missed here in the capital -- in the moving parts between September and December?

And then a second question on the total return swap transaction. When do you expect to deliver this roughly EUR 2 billion buybacks? Shall we consider something like 1/3 per year or so? And are you confirming that you're going to cancel the shares you buy back?

And sorry, just last follow-up on this point. So where does it leave your common equity Tier 1, say, long-term common equity Tier 1 targets for BPER? Like where is the right level to run this bank? You mentioned in the past in the previous plan, 14%. Is the target still there or now closer to 13%?

So thank you very much, Marco, for your question. I'll answer first your question related to the buyback. as we already mentioned, at present, no decision has been taken in this respect. So we made the transaction to provide a strong sign of confidence in the bank's strategy.

However, if we were to proceed with sale buyback, obviously, subject to all the necessary corporate and regulatory approvals, this transaction would provide us with macro hedging with respect to the planned cost to the benefit of shareholders. But let me repeat that no decision have been taken in this respect.

And now I'll put through Simone Marcucci, our CFO, for the other questions.

Okay. Thank you very much for your question. Starting from 15.1% CET1 ratio at September. These are more or less the building blocks. We will have, as you highlighted, the 55, 60 bps from Alba positive deconsolidation. We will have 70, 75 bps conservative effect one-off from the derivatives, depending on how the position will be built between now and the first month of 2026.

We will have the positive effect from the PPA. We do expect it to be 2 middle digit, but still under analysis. We will have minus 10 bps around of update operational risk. This is like every year, but this year is much, much less. Then we will have a business dynamic. We do expect 2 middle digit negative clearly.

As we already -- as has mentioned, we will have EUR 116 million, minus 14 bps. New Italian law, as you requested, this is the first of the 4 fingers. The other 3 fingers will happen in 2026 or will not be significant for us. Then we will have EUR 190 million around net integration cost that is the 270 percent of the EUR 400 million, and this accounts for around minus 25 bps.

And the rest will be positive net profit net of dividend and other minor effects. I think that on this, I have covered both questions. The last item, if there are profit and loss effect of the derivatives, it will be negligible, let me say, slightly positive among the years.

Okay. And when do you expect to take a decision on the buybacks? So when do we get clarity on this front?

As I said, it's too early. When we take the decision, we'll let you know. But for the time being, no decision has been made.

Next question is from Andrea Lisi, Equita.

The first one is on the revenue dynamic, in particular on the NII and fees. Related to NII, there are several peers hinting to third quarter NII having reached bottom and 2026 to be at least in line with 2025. Is it this indication that other banks have provided something that is also suitable for you? Or do you think that the movements of the NII can be slightly different and in case which are the main drivers?

The second related to fees is related to fees and in particular, on the seasonality you indicated in the fourth quarter last year. Looking at BPER stand-alone, it was more than EUR 50 million, if I remember well. Do you think that a similar seasonality should be expected this year as well? And the last point really on the distribution, you have indicated that the instrument the derivatives gives you flexibility on potentially launching a buyback.

If you can provide us at the current moment, given also the conditions, which is the trade-off between potentially on a higher dividend or launching a buyback. So which are the pros and the cons that you see of both situation? And so what makes feeling that some solutions could be better than the other?

Thank you very much for the question. So yes, I can confirm that inasmuch as you are concerned on the NII side, we can give a guidance that '26 would be, let's say, broadly in line with 2025. Obviously, we believe that we are working on interest rates at 175%. Today, we are at around 2%. So we believe that there might be a further decrease of 0.25 point by the ECB next year.

On the other hand, we will keep on growing and keep the trajectory that we have had in the last few quarters in terms of growth on the loan side, both on the corporate side as well as on the retail side. In as much as the fees are concerned, yes, also for last year, we had the top-up, let's say, for the premium that we received on the bancassurance activity that was around EUR 30 million, EUR 31 million.

We will have this the famous [ raffle ] also this year. We are yet not in a position to indicate what is going to be in terms of overall amount, but this will be also this year. But as you've seen from our presentation from this quarter, we are taking away the indication of this because this has become, let's say, a deferred payment that we received at the end of the year in December, but it is part of the overall activity that we have across the year.

So we will not be indicating anymore what is this top-up at the end of the quarter. But I confirm that we will have this raffle also this year. In terms of distribution, what is the trade-off. So as you know, we promised in our strategic plan to pay a dividend of -- I mean portion of the dividend up to 75%. I also mentioned several times that as we have a very strong organic capital generation and the capital piles up, we might be in a position also, but this is a decision that will be taken at a later stage to pay maybe slightly more than 75%.

On the other hand, let's say that there has been quite a strong request quarter after quarter, and you have been present to all the quarters, the presentation of these quarters, a very strong request coming from the market for a launch of a buyback plan given the fact that we are growing our capital. Now we are going through the process of integrating BPSO, so by subscribing the derivative, we have basically taken the chance to have a macro hedge in case we decide to do it.

This might be something that in the future can come to the market. But there's no very different trade-off between the 2. So we will keep on paying a dividend of up to 75% as a payout ratio. And then on top of that, there might be a share buyback in case we have a very strong capital generation as in the past.

Next question is from Matteo Panchetti, Mediobanca.

I have 2 on derivatives and on cost savings. The first one, you have decreased your CET1 target by 50 basis points, of which 40 basis points coming from the banking tax. Is it correct to say that the maximum loss amount from the derivatives, including the hedges will be worth 35 basis points? And can you tell us the sensitivity on capital for each 10% share price increase, decrease in deferred share?

The second one is on -- still on the derivatives. You have announced the merger plan, which now consider the acquisition on Sondrio minorities. If you were expected to deliver the share from your total preferred swap, can those be used as a part of transactions instead of doing a share buyback?

Is this something that you have considered? And finally, on cost savings, you -- can you quantify the impact from the 800 exits? And can you confirm this is only a BPER derivative?

Thank you, Matteo. I take the last 2 questions, and then I'll let Simone Marcucci to answer the first 2. So in terms of M&A plans, so the possibility of using the shares coming from the derivative to be distributed to the minority, no, this is not possible because this is a cash transaction with no delivery -- physical delivery of shares. So this is not possible to have -- there will be not shares to be distributed to minorities because of the typical structure of this transaction.

Last question you put was about the impact of the 800 exits. In the -- you know that in terms of cost, we have synergies up to EUR 190 million. Of this EUR 190 million, around EUR 70 million to EUR 75 million will come from the FTE reduction driven by the agreement that has to be reached with the unions.

Okay. Regarding the building blocks, I have already mentioned before, I understand that you would like to have a clarification about the building block of the derivative. The derivative for, as I mentioned before, for the 2025, we do expect 70, 75 bps, another little part in 2026 negligible. This is the effect that we will have in '25.

Clearly, it's conservative, less impact in 2025, higher impact in 2026. The sensitivities of 10 percentage of the derivatives on the EUR 2 billion, clearly will be a profit and loss, EUR 200 million up or down, but no impact CET1 ratio because all the impacts have already impacted now as a one-off. I hope I clarified. Otherwise, please let me know.

Next question is from Lorenzo Giacometti, Intermonte.

I have actually 2. So the first one is on synergies. And given that the integration seems to go as planned or even faster than planned, are you confirming the estimated synergies? Or do you see those numbers as actually a floor?

And the second one is on the merger. And assuming, as you said, it will take place in April 2026, will it have a retroactive effect? And if so, does that mean that you won't have to pay minorities in the Q1 of 2026? And actually, I have a third one on the business plan update. And so when are you publishing an update of the business plan targets?

Thank you for the question. So in as much as synergies are concerned, I can confirm synergies up to EUR 290 million at 2027, so not in 2026. And believe me to have EUR 290 million synergies, both on cost side and revenue side by 2027 is going to be a very difficult exercise. Having said so, when we merged Carige, we have indicated -- we had indicated some synergies. And at that time, the bank was able to achieve better results. But we confirm only the EUR 290 million.

And obviously, we'll see whether we are able to extract more synergies out of that. In terms of retroactivity of the merger, yes, the merger will be retroactive as at 1st of January 2026 and will have a retroactive effect, which means that the minority shareholders that will become shareholders of BPER will receive the dividends once the dividend is paid by BPER, of course. And then in terms of business plan updated, we mentioned already that we are going to present the market with a business plan update by, let's say, by the end of June in July.

We'll see. We haven't decided yet when. What I can -- what I can tell you is that for the time being, the 2 banks are proceeding in terms of the strategic plan that has been presented. So for us, October last year, for VPs, I think, in March this year, obviously, within the activity of the group. So we keep on going to deliver what has been promised to the market by the 2 strategic plan.

Next question is from Giovanni Razzoli, Deutsche Bank.

Two questions on my side. One on the share buyback. When you say that there is no decision taken on the share buyback, you mean that you have not decided yet whether to leverage on the derivative to proceed with the share buyback? So that's the first clarification.

And Simone, you mentioned that there are 75 basis points of impact of the share buyback in the 15.1% CET1 ratio at year-end. So shall I read this guidance as the fact that if you were ever to proceed with the decision of the share buyback, you would consider an impact of EUR 600 million, given or taken, given the 75 basis point impact that you had guided that is 1/3 of the EUR 2 billion in total. That's my first question.

And the second one is on the interim dividend. You decided to pay EUR 0.1 in interim, which I guess there will be a quite significant catch-up dividend in May. There are a lot of moving parts, clearly in the Q4, you guided for a 75% payout ratio. And the net profit in the 9 months for the combined entity was EUR 1.5 billion and the run rate of the quarter is EUR 500 million. So I was wondering whether we shall look at something like EUR 2 billion as a reference point for the final catch-up dividend at year-end because this EUR 0.1 has crowded out a lot of investors.

I'll take a couple of questions. And then for the more technical one, I'll let Simone answer. So first, no decision has been taken means nor if neither when. So I think I'm clear now. So no decision has been taken for a buyback. So neither nor on whether we are doing it, neither if and when we do it. So no decision taken, close discussion, I hope.

Secondly, we paid EUR 0.10 of as interim dividend exclusively on the profit accumulated by BPER, not by the group. The dividend is equal to 17% -- almost 18% of the accrued dividend of BPER, which is whatever it is, equal to EUR 1.099 This is the accumulated amount. The 17.8% equal to EUR 186 million is the first year, as you know, that we are paying an interim dividend, and you have to consider the fact also that we are -- we had to -- we have been working on the exchange ratio for the exchange for the minority shareholders of BPSO. So we could not pay more. Otherwise, this would have moved the exchange ratio for the minority shareholders. Simone?

Yes. Regarding the effect of the derivatives in the fourth quarter, I mentioned 75 bps, but I never mentioned share buyback. This is the effect of the derivatives regarding share buyback. Nothing has been decided. I cannot comment.

Next question is from Manuela Meroni, Intesa Sanpaolo.

The first one is on the total return swap. I'm wondering if there are some costs associated to this total return swap that will be accounted for in the P&L or on a recurrent basis, or the impact on the P&L will be just related to the sensitivity that you mentioned before of EUR 200 million without any additional impact on the capital?

The second question regards the banking tax. You provided some guidance concerning the reserve. I'm wondering if you can share with us your thoughts about the potential impact of the remaining part of the banking tax in 2026 and going forward, both in terms of impact on the earnings and impact on the capital.

And then I have just a clarification on the moving parts that you mentioned on the capital in the fourth quarter of this year. You mentioned the PPA. Could you please repeat what is the assumption that you are taking for the PPA?

Okay. I start with the cost of the total return swap. At the profit and loss level, the costs are negligible because there will be some cost, but there will be also some revenues that we will get from the remuneration of the dividend. Both effects will go in the line there for trading. We see the effect there.

So negligible unless the sensitivity that I mentioned before, plus 10, minus 10, but not other effect, CET1 ratio, as I mentioned. So regarding the other questions, so for the banking tax, as we mentioned, we had EUR 116 million in the fourth quarter that is a one-off. We are not clear if we go to profit and loss or not. Then we will be -- we will have -- this was the first finger of the 4 fingers.

The other 2 fingers, the ERA rate will happen in 2026 for us will be around 7 bps. And instead for the partial deduct of passive interest, this is the third finger should be in 2026 for us 4 bps decreasing in the following years. For the fourth finger, we shouldn't have any effect.

Sorry, PPA, I forgot to mention the PPA. The PPA, we are still, as I mentioned, discussing. We don't have absolutely no final numbers. You can assume a middle 2-digit number, but still absolutely under discussion at the moment.

Next question is from...

I'm sorry. No, sorry, just to specify the previous answer. The first finger that equals to 14 basis points or EUR 160 million, we conservatively deducted from CET1 ratio of this year. Obviously, if the decision would be not to charge, and this, as I said, is a decision taken at system level, not by us. So if this will not be charged in 2025, we will have 14 basis points higher in terms of CET1 ratio in '25 and the deduction in 2026.

Next question is from Hugo Cruz, KBW.

I have two questions. First is on the dividend for 2025. If you could clarify what are your intentions for the final dividend? My colleague, [ Razzoli ] just asked if you could pay EUR 2 billion. Yes, like if you could clarify that, I think it would be very helpful.

And then the second question on the synergy potential, especially in light of the business plan that you announced middle next year. Do you see the potential for higher synergies after 2027 than what you currently target or not?

Thank you, Hugo, for the question. So dividend, as I said, we are paying 10 basis points on BPER's accumulated profit. And this 10 basis points equal to 17.8% of the accumulated profit of BPER, which equals to EUR 1.099 so far. Obviously, as we promised and we mentioned in our strategy presentation, strategic plan last year, we will pay 75% of the combined profit of the 2 banks. When it will be -- so will be decided by the Board and the assembly and then we'll pay.

So we confirm the 75% on the combined but we need to have the merger, hopefully, as I said, depends also on the authorizations coming from regulator and so on with retroactive effect from the 1st of January. So automatically, this is going to be the situation.

In terms of synergies, as I mentioned, we confirm the EUR 290 million at the end of 2027. Obviously, the bank doesn't cease to operate in 2027. We will keep on going in 2028. So hopefully, we'll be able to extract even more synergies. But it's too early to say because we have to proceed first with the integration, and then we will see what we'll be able to deliver.

The only note that I can say is that if I look at the past, when BPER acquired Carige, at the time, the bank had indicated some synergies, both on the cost and on the revenue side and was able to beat the indication. On the other hand, we -- which means that the bank is always struggling to get better results than what indicates. On the other hand, we have to consider that these are completely 2 different situations.

Carige was a bank that was suffering because of the problems that it had for many, many years. BPSO is a good bank with a good track record. So there will be, for instance, in terms of revenue synergies, there will be some synergies, for instance, as we indicated from the liquidity because we'll be able to address liquidity at a lesser cost, but will not be as much as Carige because Carige obviously was paying much more in terms of liquidity from the market. So it's a much different situation. But hopefully, we'll be able also from 2028 to deliver more.

Next question is from Ignacio Ulargui, BNP Paribas Exane.

I just have two. One is on Alba Leasing. So do we expect any impact in the P&L from the deconsolidation of Alba Leasing in the fourth quarter?

And the second one is on credit quality. If I just look to your guidance of below 35 basis points cost of risk and I compare that with the 9 months that there's a very big gap potential increase in the fourth quarter. Given the comments that you've made during the presentation about the solid credit quality, we shouldn't see any meaningful impact. But just wanted to get a bit of a heads-up on how do you see credit quality evolving from here? And what should we expect on the cost of risk in the fourth quarter?

Thank you, Ignacio. In as much as the impact from Alba Leasing deconsolidation will be negligible, really EUR 10 million, so really negligible, nothing compared to the overall activity of the bank.

In as much as credit quality is concerned, I will ask Mr. Cristini, our CRO, to answer your question.

Thank you, first of all, for your question. In general, it's worth noticing that as highlighted in the presentation, the credit risk profile of the bank remains very, very positive with very low both gross NPL ratio, stable annual default rate around 1%, stable probability of default and very high coverage ratios, both for performing and nonperforming exposures.

Having said that, of course, there are still some uncertainties related to the macroeconomic scenario and the potential related to the U.S. trade tariffs. And so we prefer to be conservative as we usually do regarding credit risk. So our guidance is of the cost of risk on an annual basis lower than 35%. We continuously monitor the evolution of the credit risk profile of the bank. But as I have already highlighted, we haven't detected currently any particular signals of deterioration of the credit risk profile of the bank.

So we shouldn't expect any meaningful top-up of provisions in 4Q at this stage? I mean just that you are very conservative in the guidance?

No top-up. You have seen that we keep a high level of overlays. We consider our current coverage ratio, both performing, nonperforming. Nonperforming exposure had a weight. Anyway, we will continuously monitor the evolution of the macroeconomic scenario.

Next question is from Juan Pablo Lopez Cobo, Santander.

And sorry for a new follow-up question on the total return swap. I don't -- I'm not sure if you are able to answer, but can we understand the counterpart will need to cover by physical shares in the market? This is my first question.

And then one regarding OpEx. I don't know if you could comment in the last business plan presented both by BPER and BPSO, there was a hiring of more than 1,000 new employees in the case of BPER and more than 200 new employees coming from BPSO. Is that something that is still in place?

And the last question, and probably this is for the business plan for you in July, but that's almost 6, 7, 8 months from here. Your latest guidance for the combined entity was more than EUR 2 billion for 2027. The consensus is above that figure. I don't know if you could provide any update on that one.

So for -- I don't know if you -- because we couldn't hear properly your voice. But for the TRS, there's no delivery of shares, if this was the question. This is a cash transaction. So it is a derivative, which does not provide for the delivery of any physical stock, okay? So there is no way that we receive stocks. In case of winding down of this, we will be receiving or paying the financials, so whatever is going to be, if the stock has increased in value or decrease, but no delivery of physical stock. And so this is what it is.

In terms of the OpEx, when we presented our plan last year, we indicated a reduction in employees and we reached an agreement with the unions, which provided for 1 new hiring for 2 exits basically. And this is what has been happening so far. In fact, as I mentioned during the presentation, we had a reduction in 1 year of 1,100 employees year-on-year.

In terms of Sondrio, they were providing for hiring. I don't remember the exact number because it was their plan. Nevertheless, as we are putting together the 2 banks now, we are coming up -- we came up with a new plan, which is under discussion with the unions for the reduction of 800 employees always on voluntary basis, which means retirement or preretirement schemes basically. And this is the number that I can indicate.

So from the number we put there, which is 22,900, less the 260 I think that is the Alba Leasing employees. And once we have reached an agreement with the unions, it will be minus 800 plus the one that we will have to hire following the agreement with the unions, hopefully, will be the scheme -- will be the same as in the past. So 1 new hiring, every 2 exits, but this is under discussion with the unions, as I said.

The last -- the third question was this. I don't know if I answered all your questions because we couldn't hear well. So please let me know.

Yes. The last one was regarding the combined target, that was net income above EUR 2 billion for 2027. I don't know if you could provide some update on that.

No, no. Yes, yes, we confirm because if we add the 2 coming from the plan, we will be about EUR 2 billion.

Next question is from Luis [ Manuel ] Pratas, Autonomous.

My first question is again on the derivative structure. So we completely understand this gives you extra flexibility in executing a share buyback in the future. However, when BPER was trading well below the book, the bank always refused to do share buybacks. So my first question is essentially what led to this big change? And sometimes the press also speculate on this being a proactive M&A defensive action. Can you comment on this?

And then just a clarification on the 70 to 75 bps day 1 impact from the derivative. Could you split the impact on the numerator and also the denominator? Is there any market RWA inflation from the derivative? Or is it just a deduction?

Okay. So I'll take the first question. No, definitely, it's not a defensive move. Then the market reads this as the market wants to read it. But I can confirm that it's not a defensive move. We decided to do it now, and we were not doing it in the past because in the past, we were BPER on a stand-alone basis. And the transaction on Sondrio, so the OPS on Sondrio was positive, but we knew only at the end of July. And so until we knew what would be the outcome of our offer, we could not decide whether to do this or not as we were able to reach the over 80% shares of Sondrio. And therefore, we were -- it was very clear to us that the merger of the 2 banks would have happened.

Then considering, as I mentioned before, that we believe in the growth prospect of the bank, considering the integration of Sondrio into BPER and the full development of the related synergies, then we decided to do this transaction in order to show the strong confidence that the management has in the bank strategy following the completion of the public exchange offer on Banca Popolare di Sondrio and again, in view of the integration of the 2 banks. So this is the reason why we decided to do that.

In as much as the exact impact of the derivative is concerned, Simone will answer.

So the 70, 75 bps impact estimated for 2025 are almost totally due to the deduction while the effect on risk-weighted assets is negligible a couple of bps.

[Operator Instructions] There are no more questions registered at this time.

Okay. Thank you very much to everybody, and see you soon. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.